Can the yuan dethrone the US dollar as the world’s reserve currency?

[Song Hong]

Euro vs dollar in share of global payment. I am pessimistic about Euro though.

But Eurozone a already de-dollarized for a long time and Europe did reap lots of benefit.

 

[Song Hong]

Imagine if Eurozone is firmly within dollar zone, today dollar will still be a big hegemony. In this POV, the dollar is indeed weaken by Euro. The Euro despite of all reasons given by European elites, is a big challenge of USD. Perhaps the worst thing about it is. It set an example for others to follow suite.

China will say "Europe can create own international currency, why cant we".

Else the West would have use the pretext of the following against China

......China against rule based international order .....

......and China wants to compartmentized world payment and world reserve system and this will cause depression and even starvation in the world..

 

[MH.Yang]

explain to me how you can "weaken" USD but not destroy it? That's the third time I have heard this in this post alone. How does it even work?

I mean drop US reserve below 50%? How about 40? how about 30%, so say for China 3 trillion $ Forex, you r goal is to for US to hold 1.2 trillion Chinese Forex ransom (@ 40% reserve) or 900 billions ransom (if you are talking about 30% reserve status) instead of 1.8 trillion ransom (@ current 59%)

On the other hand, even if that is your plan, it may work for you, it may not work for other country, especially those in the west, because you may be able to hold out at that level, other counties don't have trillion dollars Forex to take the heat, so are you going to ask for them to do suicide for you if you are not replacing their USD with Yuan? Or you want EU or some other currency to do it? You can't drop USD level and don't replace it with something else

On the other hand, would you think US would make USD readily tradable for you to "Obtain a better trade environment? What is the basis you are basing this on? If I am the US government, the day USD loses its dominance and I can't use my USD to dictate world monetary policy is the day I will severely limit currency right so you can't build a better trade environment, I mean, you either step up or I am out. I won't stick around because I am a nice guy in the bottom of my heart it wants to help you to achieve a "better trade environment". For what? Honestly, if I can't dictate term, I would want to be no part in it, as there are nothing in it for me.

I understand completely what the Chinese way of thinking, on the other hand, you don't seem to understand the western way of thinking. What you are saying is nothing but some utopian BS. In the west, everything they do is for a reason, if USD is not going to be dominating the currency market, they won't do shit on just about anything, and you expect them to corporate with you when you try to destroy their dominance?

LOL


That changes nothing, i still don't see how China "win" if they were top 3. If so, weren't EU "won" a long time ago?

From the perspective of China, replacing the USA with CNY is not the best choice.

Because although 'world currency' represents significant benefits, it also implies significant burdens and risks.

Moreover, it also requires China to transform from a surplus country to a deficit country. Only when other countries have channels to obtain CNY can CNY maintain its position.

The best choice for China is to diversify the world currency, diversify global financial risks, or use precious metals such as gold.

As for the US dollar, we only need it to retreat to the point where it cannot export inflation to the world. The USA has strong agriculture supported by the Mississippi River basin, and the world economy needs it.

 

[Song Hong]

From the perspective of China, replacing the USA with CNY is not the best choice.

Because although 'world currency' represents significant benefits, it also implies significant burdens and risks.

Moreover, it also requires China to transform from a surplus country to a deficit country. Only when other countries have channels to obtain CNY can CNY maintain its position.

The best choice for China is to diversify the world currency, diversify global financial risks, or use precious metals such as gold.

As for the US dollar, we only need it to retreat to the point where it cannot export inflation to the world. The USA has strong agriculture supported by the Mississippi River basin, and the world economy needs it.

Many people under estimate the risk and harm of being world reserve currency. To do this, US got herself de-industrialized. It also breed a bunch of lazy, low IQ US elites.

Keynes as argued against USD being world reserve currency, but US is not going to listen.

Keynes propose bancor @ IMF where profit of minting tax will be shared across all members.

Now Bancor is reincarnating as BRIC currency.

 

[Song Hong]

The Chinese dynasty has tried both metal and paper currency before. The Yuan dynasty at the end debauch her currency massively causing big crisis in the empire. The lesson was learn. Ming and Qing never wanted paper currency despite of national crisis. China use silver.

I guess in the collective memory of Chinese elite, there is still some inclination that currency should peg on something.

 

[MH.Yang]

Many people under estimate the risk and harm of being world reserve currency. To do this, US got herself de-industrialized. It also breed a bunch of lazy, low IQ US elites.

Keynes as argued against USD being world reserve currency, but US is not going to listen.

Keynes propose bancor @ IMF where profit of minting tax will be shared across all members.

Now Bancor is reincarnating as BRIC currency.

Yes.

In order to ensure employment and strong national strength for over a billion people, China will never give up industrialization. So China will continue to maintain its position as a surplus country.

How can CNY gain the status of "world currency" when other countries cannot obtain CNY from trade?

And if you want to maintain the status of currency, you must eliminate challengers and ensure its safe use worldwide. This means endless war and consumption. It will ultimately weaken our moral advantage, attract endless enemies, and ultimately lead to the downfall of the country.

If powerful Western countries are unable to sustain these consumption in the long term, how long can we persist? So we won't be greedy and foolish like the Anglo Saxons.

For China, as long as we have the strongest industrial base and no country can use currency to export inflation, then CNY does not need to gain the status of "world currency", and we can still obtain the largest piece of cake.

On the contrary, letting other major powers take on risks and consumption will always put us in a moral high position. Isn't this a better choice?

 

[Song Hong]

Yes.

In order to ensure employment and strong national strength for over a billion people, China will never give up industrialization. So China will continue to maintain its position as a surplus country.

How can CNY gain the status of "world currency" when other countries cannot obtain CNY from trade?

And if you want to maintain the status of currency, you must eliminate challengers and ensure its safe use worldwide. This means endless war and consumption. It will ultimately weaken our moral advantage, attract endless enemies, and ultimately lead to the downfall of the country.

If powerful Western countries are unable to sustain these consumption in the long term, how long can we persist? So we won't be greedy and foolish like the Anglo Saxons.

For China, as long as we have the strongest industrial base and no country can use currency to export inflation, then CNY does not need to gain the status of "world currency", and we can still obtain the largest piece of cake.

On the contrary, letting other major powers take on risks and consumption will always put us in a moral high position. Isn't this a better choice?

Since a long time, I have argued on the double edge sword of CNY being reserve currency.

Worse thing is it will breed moral decadence among Chinese elites.

Being the world reserve currency, China will also need to de industrialize and move factory abroad. It cause big pain to the population.

Marx taught us that productive capacity is "capital" not monies.

It is stupid to destroy own capital and wealth and ship it to others.

 

[MH.Yang]

Since a long time, I have argued on the double edge sword of CNY being reserve currency.

Worse thing is it will breed moral decadence among Chinese elites.

Being the world reserve currency, China will also need to de industrialize and move factory abroad. It cause big pain to the population.

Marx taught us that productive capacity is "capital" not monies.

It is stupid to destroy own capital and wealth and ship it to others.

The path of de industrialization in the USA is not a choice for the US govt or the American people, it is the choice of capital.

Fortunately, in China, capital has no right to choose the path of the country.

That is the biggest difference between us and USA.

 

[jhungary]

From the perspective of China, replacing the USA with CNY is not the best choice.

Because although 'world currency' represents significant benefits, it also implies significant burdens and risks.

Moreover, it also requires China to transform from a surplus country to a deficit country. Only when other countries have channels to obtain CNY can CNY maintain its position.

The best choice for China is to diversify the world currency, diversify global financial risks, or use precious metals such as gold.

As for the US dollar, we only need it to retreat to the point where it cannot export inflation to the world. The USA has strong agriculture supported by the Mississippi River basin, and the world economy needs it.

Again, you want the thing in Red to happen, but you also want the thing in Blue to happen.

I mean, even 6 years old know China keep using USD to trade is for its best, because you don't need to come up with the currency yourself. again, would you think if the situation is reversed and someone told you, hey Yuan is too influential these days and I want it to lose its influence in world reserve market, but I still want to keep continue to use Yuan to trade, what do you think what Xi would say??

Seriously, what you are saying is nothing but a dream, the condition can only be, IF you want USD to lose influence, CYN THEN would have to be step up. You can't have the cake and eat it, and that's the main point.

 

[beijingwalker]

Again, you want the thing in Red to happen, but you also want the thing in Blue to happen.

I mean, even 6 years old know China keep using USD to trade is for its best, because you don't need to come up with the currency yourself. again, would you think if the situation is reversed and someone told you, hey Yuan is too influential these days and I want it to lose its influence in world reserve market, but I still want to keep continue to use Yuan to trade, what do you think what Xi would say??

Seriously, what you are saying is nothing but a dream, the condition can only be, IF you want USD to lose influence, CYN THEN would have to be step up. You can't have the cake and eat it, and that's the main point.

Multiple global currencies are the solution, the world still existed and traded with each other before US came into the picture.

 

[jhungary]

Multiple global currencies are the solution, the world still existed and traded with each other before US came into the picture.

Not with US being that dominant. The closest to the USD is Euro, which is at 21-23% basket. There are virtually no chance for anything else to come close

You are talking about the different they need to make up is for the world economy, not just economy of EU, again, what you find comfortable tading with USD other do too, the only thing is, unless they have the same problem as you, they wouldn't want to change. That is before if there are any alternative to begin with.

Again, places like Saudi or even Hong Kong are pegged to USD, they didn't do it for no reason. You can trade with both place with Yuan, it wouldn't even make a different for USD.

 

[beijingwalker]

Not with US being that dominant. The closest to the USD is Euro, which is at 21-23% basket. There are virtually no chance for anything else to come close

I suggest you don't say it with such a strong certainty, we'll wait and see.

 

[Song Hong]

One big reason why certain currency gain reserve status is -- if I hold this currency what can I buy?
You cannot buy a lot of things holding India Rupee but you certainly can buy most things you want holding CNY.

The next thing to think is -- if I hold this currency, can some pirates come in and confiscate my wealth?

This is monetary theory 101.

 

[MH.Yang]

One big reason why certain currency gain reserve status is -- if I hold this currency what can I buy?
You cannot buy a lot of things holding India Rupee but you certainly can buy most things you want holding CNY.

The next thing to think is -- if I hold this currency, can some pirates come in and confiscate my wealth?

This is monetary theory 101.

You first need to understand that currency is only the medium for the distribution of goods. The USA can control distribution rights by mastering the world currency. But this is not the only method, and it is not the best either. We know that it means a huge cost. China can obtain distribution rights by mastering industry, which comes at almost no cost. We only need the currency side to be in a balanced state, without a particularly strong currency, then the distribution rights will naturally be controlled by the supply side.

 

[Foinikas]

I like the Yen more