At present, there is a discussion on “de-dollarization” in the Western academic circles, and believes that the United States’ long-arm jurisdiction policy is becoming an important factor in the “self-destructing Great Wall” of the internationalization of the dollar. More and more American overseas residents, residents of other countries, and financial institutions are feeling the tremendous pressure brought by the US “second-level sanctions.” For example, the United States has passed regulations such as the “Overseas Account Tax Compliance Act”, the “Anti-Corruption Act against Sanctions against U.S. Adversaries” Act, and other regulations to exert political pressure on relevant sovereign states, while also increasing the compliance cost burden of relevant financial institutions. More and more countries are beginning to seek alternative financial transaction and settlement schemes that bypass the US dollar regulatory system, avoiding erosion of economic autonomy, and reducing the institutional cost problems brought about by “petroleum dollars” and “weaponization of the US dollar”. In some parts of Southeast Asia, traders are beginning to realize that it can be more cost-effective to settle in RMB or local currency than in USD.
This view of western academic circles has a certain degree of rationality and reference value. Although there is currently no currency that can challenge the hegemony of the US dollar, the group that intends to “de-dollarize” has formed a growing interest group. After the dollar was weaponized, more and more countries began to consider “de-dollarization” as an important program for national economic security. This group includes emerging economies including Turkey, Russia, and India, as well as oil-exporting countries such as Iran and Venezuela, which have a stronger tendency to “de-dollarize”. At present, in the field of global governance, an effective mechanism has not been found to organize this loose interest group, but the grouped anti-antibodies have a growing tendency to “de-dollarize” centrifugation. Since last year, the relevant countries’ reconsideration of the ratio of gold to US dollars in foreign exchange reserves fully illustrates the urgency of this issue.
Historical development experience shows that the circulation of any international currency in the world has its inherent laws. Since mankind entered the era of great navigation, the currencies of the relevant sovereign countries in the rise of the great powers have successively played the role of international currencies. For example, Portuguese Escudo, Spanish Peso, Guilder, French Franc, British Pound. These currencies have led the way with the growth and decline of national strength for 80-100 years. Before the advent of credit money, the international
Issuance and circulation need to be supported by the strong production and trade organization capabilities of the countries concerned. The currency internationalization of the early colonial countries was mainly based on and supported by overseas plundered gold and trade networks.
In the early days of the Bretton Woods, the value of the US dollar was also based on US production capacity and gold reserves. After the Second World War, the United States had the world’s most powerful production capacity and three-quarters of its gold reserves. The decoupling of the US dollar from gold and the decline of the value of the US dollar have been essentially affected by the European countries’ run on gold reserves. The US dollar after decoupling from gold is a typical national credit currency. The national credit supporting the US dollar can be summarized into four aspects: the existing production capacity of the United States, the consumption power of residents, and the international
Public goods supply capacity and dollarized international transaction network. These four factors are also an important basis for judging the future direction of the US dollar as an international currency. At present, the United States’ share of the global economy continues to decline, there is little room for overdrafts in the consumer economy, federal debt has reached record highs, and the ability to maintain or expand existing global public goods supplies has continued to decline. These factors will erode the hegemony of the US dollar.
The U.S. debt problem is also one of the most serious challenges for U.S. national credit. The position of the US debt ratio is likely to cause the federal government to have a solvency gap, and it is difficult to achieve a substantial correction of this debt ratio. During the Clinton administration, there was a pullback in debt ratios, but this was closely related to the rapid development of the Internet industry revolution in the United States. At present, the overall situation of US industrial expansion is not optimistic. When a sovereign government holds another sovereign government debt and enters the edge of trust, they will gradually change their debt holding structure. Although it is difficult for any single sovereign state bond holdings to shake the US $ 24 trillion total plate, once collective and trend reductions occur, it will trigger group imitative behavior. The private sector’s holdings of bonds will be more sensitive than that of sovereign governments, and the issue of US debt will likely become an important risk event for the US dollar crisis.
So who will eventually act as the “gravedigger” of the U.S. dollar and push the international financial system toward a diversified and multi-pillar currency system? The euro is certainly a promising one. Low Euro currency value
The policy of estimating and negative interest rates is actually supporting the US dollar in the opposite direction, and this adjustment of the interactive relationship will have a profound impact on the status of the US dollar. Currently, the U.S. government needs to repay $ 1.4 billion in debt interest every day, benefiting to some extent from low interest rates. It is assumed that once the euro area economy recovers, monetary policy normalizes, the world bids farewell to negative interest rates, or enters the era of micro-inflation, the Fed’s interest rate policy will also be affected. Europe has a strong industrial and economic foundation. Europe has disagreements with the United States on issues such as trade and the Iranian nuclear issue. As a result, Europe is becoming more aware of the profound influence of the United States on its own trade and economic interests. All parties in Europe are feeling the pressure from the hegemony of the US dollar, and the consciousness of “European sovereignty” is increasingly awakened. In order to bypass the SWIFT USD settlement system, Europe launched the “IN 交流 STEX” in early 2019. Although it is a barter trading system, INSTEX is currently unable to effectively play its corresponding role, but with the TARGETII system, its trading function will have a lot of room for expansion in the future. In fact, there have long been calls for the euro to be used as a currency for commodities such as oil. These internal and external factors will further enhance the international recognition and extensiveness of euro transactions.
What role will the RMB play in this process? The internationalization of RMB has a large space for development, but the current level of RMB internationalization is still far from the international currency. In the future, the internationalization of RMB and its development space will depend on China’s national credit and the transaction cost of RMB. Among them, the national credit of the RMB depends on two factors: First, it has the support of production capacity with a strong industrial base. Foreign RMB holders can obtain the goods and services they want through the RMB they hold, or they can freely carry out Related investments; Second, China’s ability and determination to maintain the value of the renminbi, and the institutional guarantee for the formation of the renminbi’s internal and external value. The stability of the domestic macro economy is a medium-to-long-term factor related to the stability of the value of the renminbi. Whether effective industrial transformation and high-quality development can be promoted smoothly is the cornerstone of maintaining the value of the renminbi’s internal and external values.