Since I have been born, the US dollars have been the major reserve currency for so many countries around the world. It is possible since I am not close to 80 years and the US Dollars have been world reserve currency since 1944, according to Investopedia. In case you do not know how powerful the US Dollar is, it is used by virtually all oil producing countries as a major country, and it is regarded as the petrodollar.
While it has been riding this horse for a long time, so many people think it is about to lose its power.
China going the extra mile to become the world economic power, trying to create trade routes around the world, lending money to countries that cannot pay back in over 100 years to come, and ensuring that they still keep giving loans. Also, the Russian, Ukraine war, is another reason, as several countries are looking into adopting other currencies to be able to trade with Russian, following the sanctions placed on them.
Without any doubt, we can also tell that the increasing US account deficit is another threat to the US dollar, and the same Dollar is used to fund these deficits. If not for the high demand of dollar, the US wouldn't be able to sustain its deficit but now that there are different thoughts from different nations on which currency should be their reserve currency, it is starting to look like the US Dollar is going to lose its touch sooner or later.
At a point in time, the Euro tried to topple the dollar, and become the major currency, but the EURO market crash killed the move.
The YUAN is believed to possibly topple the US Dollar, but I cannot say that it is possible, or it isn't. What do you think about the government of countries choosing the Chinese YUAN over the US DOllar?
Hi dear friend @gbenga
as long as people drink coca cola , the dollar will stay . coca cola is an example, but mc donalds apple microsoft facebook google are all companies from the united states, they don't need any country that makes a few billion, when their companies produce billions of billions of dollars in profits
god bless you
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Coca-cola and the dollar are not Five and Six. Also, Companies like NIO are coming up, and a country can lose its world power in matter of minutes by just losing its currency as the dominant currency or world.
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Hello @gbenga
From what I see, the Chinese are doing their job. Even many Latin American countries are quite indebted to China, which will at some point make them more and more powerful, and strengthen their currency.
The US is losing strength, their economy is going bad too, the dollar with the indiscriminate printing devalued a lot more, which means that big changes may come in that aspect.
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China is gradually becoming the World Bank, lending every country money, and this case will lead to China having a say in these countries politicking.
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The US might do anything against their power to make sure that their dollar remain powerful but of a true the Yuan is doing amazingly well in all corners. This is a big battle but it is a drama that is cool to watch, let us see how it unfolds.
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This is true. The US has been instigating Wars, conflict and so many wrongs (theories I cannot prove including that of Gaddafi). All this is to keep the US dollar in power, and I wonder what else they are willing to do to remain there.
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I think about this a lot.
My way of thinking about it, the Chinese need to be a lot more transparent with their finances, with their government, and their trade practices, before anybody will sustainably hold their currency or their debt.
Or, they need to win the next World War, and no one will really have a choice to use their currency…plus have a much larger economy and trade with everyone else…compared to the US.
Good post @gbenga.
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One Shortfall china has is that, it is a communist nation. This makes it very shady because the supreme leader would do anything to remain in power, thereby not making it transparent.
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I agree with that...communist nations have a poor track record of being transparent.
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In my humble opinion, CNY cannot flip the US dollar anytime soon. Yes, I know there are talks between Saudi Arabia and China to use YUAN for oil deals, but with that said, it would be hard to imagine the remaining 20 largest economies (UK, Germany, France, Japan...) choosing YUAN over the dollar.
Thanks for sharing :) @gbenga
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The Euro tried it and wasn't successful, and before the international body will accept CNY, there will be so many stumbling blocks to making the CNY acceptable
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Dear @gbenga
Quite unique and interesting choice of topic. Upvoted already :)
I found it fascinating to see how many people consider Chinese Yuan to ever be able to challenge USD.
Not only China is facing their own issues (economy falling apart faster than US or europe) but also they completely lost trust of entire world towards themselfs.
And at the core of any reserve currency is trust.
With Chinese lack of transparency, I don't see any developed country building reserves in Yuan. I just don't see it happening.
Also it is important to point out why USD is a reserve currency in the first place. Where demand is coming from?
Most of all: majority of debts around the world are in USD. This is crutial. Add the fact that USD need to be used to cover transactions for oil. And those 2 reasons alone are the cause of many countries stocking up in USD. No country want to end up in situation when they cannot pay their debts (in USD) or they cannot afford to buy Oil (because their local currency colapsed).
China can create trade routes, but they have lost TRUST towards their authorities. So this reason alone is already enough.
Again: solid read. Enjoy your upcoming weekend :)
Cheers, Piotr
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Hi @gbenga
International trade and the terms which govern it are complex. It would be difficult to pick one over the other or to switch for usd users to yuan for that matter.
However I see it quite difficult to see China toppling USD as the leading currency of trust.
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Hi @gbenga.
The reality is that many voices are of the opinion that the dollar will lose its value over time, because they do not have support for all their money and this can be an explosion at any time, but as many continue to trust the currency has not fallen yet.
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