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After years of RMB internationalization, RMB is currently in the fourth place among international currencies. It is second to the US dollar, the euro, the British pound, but has surpassed the Japanese yen.
The main reason for the internationalization of the currency of some countries or regions is that there is demand for the currency in other countries, either for goods or for investment.
If a country in the Middle East wants to buy United States goods, such as medicine, communication equipment, and Boeing planes, and buys them in the local currency, United States companies are reluctant to accept the local currency because they think that the currency is worthless and may even depreciate sharply at any time.
If purchased in dollars, United States companies will gladly accept it, as long as it is not subject to legal sanctions.
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The most popular is the US dollar, followed by gold and commodities, as these are both real assets that are worth more than the currencies of the local countries in the Middle East. However, the demand for international currencies does not stop here.
On this basis, new demand will arise, that is, to use this currency as a reserve currency to cope with economic and trade changes in the international market, and even to cope with geopolitical shocks.
It can also be used to maintain and appreciate the wealth of reserve countries, and put this foreign exchange reserve in the right place, for example, after many countries obtain dollars through trade, put the dollars in the United States, and allocate United States treasury bonds, so as to obtain a certain value-added income.
The currency of the United States, the US dollar, has been internationalized because the high-tech system is in the hands of United States, especially the original high-tech, which is almost United States dominated by one at present. The European Union, Japan, South Korea and other countries have established alliances with the United States, so as to obtain these technologies in the "second time" and carry out application-level high-tech development, so as to share a certain amount of monopoly profits.
And to get these technologies, you need to pay in dollars. Middle Eastern countries, such as Saudi Arabia, have long chosen and held the dollar in order to provide security support to United States.
Developing countries such as China, whether they want to obtain relatively high-tech products from United States, or relatively weak products from the European Union, Japan, Korea, etc., basically need to pay in US dollars, because their countries themselves also need a large number of US dollars to maintain a favorable payment position.
From this payment system, we feel that the payment system is a tool to maintain the international class system.
So why did the euro, the pound, and the yen become international currencies?
After the Industrial Revolution and before the rise of United States, the center of the world has always been Europe, and modern industry, commerce, and lifestyles were established and developed from Europe United States.
Europe still has strong industrial technology, for example, when it comes to fuel vehicles, it is still the world of Europe, and there are many big names. So there are still people who need a lot of euros to pay for products from EU countries.
The emergence of the British pound as an international currency has a lot to do with the financial industry, thanks to the common law system and the support for financial innovation, London remains one of the world's financial centers, alongside New York.
Like commodity trading, international reinsurance trading, London is very developed.
Financial products traded in London prefer to be denominated in pounds.
In addition, United Kingdom is to a certain extent a supplement to the establishment of an international order in United States, for example, the supervision of United States is stricter than that of United Kingdom, and the treatment of foreign capital and foreign capitalists is much more standardized in the United Kingdom, and as long as the law is not violated, there are few political risks.
With this, and the fact that London is highly modern, it still leads Europe in terms of humanities, and the rich people from all over the world like to concentrate on London, which also brings the demand for the pound.
As a result, the British pound became the third largest currency in the world. Japan is a developed country and the third largest economy, so the yen also has a certain position in international payments, but Japan's economic strength is relatively small, so the yen lags behind the yuan.
This is from a demand-side perspective, where we analyze the internationalization of a certain currency. Let's look at the supply side of international money from another angle.
Taking the most popular dollar today, for example, the internationalization of the dollar has brought huge benefits to the United States, so the United States people are not only very happy to promote the internationalization of the dollar, but also in order to protect the interests of the United States, they do not hesitate to attack competitors to maintain the international status of the dollar.
With the international currency status of the US dollar, United States companies are free from the trouble of currency exchange and exchange rate exchange risks, whether they conduct foreign trade or investment, and can focus on their own industries without worrying about financial risks, which only United States companies can enjoy.
In addition, and more importantly, the international currency status of the US dollar allows Wall Street capital to influence the pricing of assets in other countries, and when a country's debt shows bad signs, Wall Street capital can siphon out the dollar.
Wall Street capital can buy the country's assets at prices much lower than normal by allowing the country's currency (e.g., Southeast Asian countries and Northeast Asian countries in the 1998 Asian financial crisis) to depreciate its currency, resulting in a massive depreciation of the country's assets and insolvency.
This is financial plunder. As a result, the United States became the majority shareholder of Samsung in Korea. Since there are so many benefits to becoming a world currency, the United States will certainly play against their opponents.
For the euro, this is the target of the United States, because the euro weakens the international position of the dollar. If war is introduced into Europe or its periphery, Europe's own development will be affected and the credibility of the euro will be shaken.
So the war in Ukraine has a very negative impact on Europe, and it has also led to a decline in the status of the euro. As for the pound, because he is essentially an United Kingdom auxiliary to the United States, and can also help weaken the euro, he is United States willing to give the pound a certain international status.
In the case of the renminbi, it is its main competitor. Although the euro is currently the second in the world, the yuan is the fourth in the world. But behind the status of international currencies is geopolitics.
United States define China as the primary competitor, both politically and economically and tradely, of which the international status of the renminbi is both a demonstration and a contributing factor for China's international status.
Therefore, while we are promoting the internationalization of the RMB in the Belt and Road countries, the United States is hindering the international circulation of the RMB. Finance officials in Iraq said the country had suspended settlements in renminbi because of United States instructions. The intention to crack down on the renminbi is clear.
But is this blow good for the dollar? I think it will only dig the grave of the dollar itself.
Can he stop the internationalization of the renminbi? The answer is no. Because the international status of a country's currency is essentially related to its economic level. China is the world's largest manufacturing country, and all countries cannot do without China's high-quality and low-cost products.
Production in any country is not only not guaranteed quality, but also expensive, which is a high price for the country's residents. Moreover, China's scientific and technological level continues to rise, such as new energy vehicles, photovoltaics, batteries, etc., the performance of other countries' products is far inferior to China's products. For the purchase of Chinese goods, you need to use RMB.
United States' single-minded attack on the yuan has exposed the downward trend of the dollar, shaking the confidence of other countries in holding the dollar, while the Chinese currency will increase recognition.
Iraq released this news because Iraq hoped that the outside world would put pressure on the United States to allow it to freely settle with the renminbi.
What is your view on Iraq's suspension of RMB settlements? Welcome to discuss in the comment area!