De-dollarisation - Digital renminbi RMB, (数字人民币 Chinese Yuan)

 

 

Digital renminbi 

BIG BREAKING

the People's Bank of China suddenly announced that the digital RMB (Renminbi, Chinese Yuan) cross-border settlement system will be fully connected to the ten ASEAN countries and six Middle Eastern countries, which means that 38% of the world's trade volume will bypass the SWIFT system dominated by the US dollar and directly enter the "digital RMB moment". This financial game, which The Economist called the "Bretton Woods System 2.0 Outpost Battle", is rewriting the underlying code of the global economy with blockchain technology.

While the SWIFT system is still struggling with the 3-5 day delay in cross-border payments, the digital currency bridge developed by China has compressed the clearing speed to 7 seconds. In the first test between Hong Kong and Abu Dhabi, a company paid a Middle Eastern supplier through digital RMB. The funds no longer went through six intermediary banks, but were received in real time through a distributed ledger, and the handling fee dropped by 98%. This "lightning payment" capability makes the traditional clearing system dominated by the US dollar instantly look clumsy.

What makes the West even more frightened is the technical moat of China's digital currency. The blockchain technology used by the digital RMB not only makes transactions traceable, but also automatically enforces anti-money laundering rules. In the China-Indonesia "Two Countries, Two Parks" project, Industrial Bank used digital RMB to complete the first cross-border payment, which took only 8 seconds from order confirmation to funds arrival, 100 times more efficient than traditional methods. This technical advantage has enabled 23 central banks around the world to actively join the digital currency bridge test, among which Middle Eastern energy traders have reduced settlement costs by 75%.

The deep impact of this technological revolution lies in the reconstruction of financial sovereignty. When the United States tried to sanction Iran with SWIFT, China had already built a closed loop of RMB payments in Southeast Asia. Data shows that the cross-border RMB settlement volume of ASEAN countries exceeded 5.8 trillion yuan in 2024, an increase of 120% over 2021. Six countries including Malaysia and Singapore have included RMB in their foreign exchange reserves, and Thailand has completed the first oil settlement with digital RMB. This wave of "de-dollarization" made the Bank for International Settlements exclaim: "China is defining the rules of the game in the era of digital currency."

But what really shocked the world was China's strategic layout. Digital RMB is not only a payment tool, but also a technical carrier of the "Belt and Road" strategy. In projects such as the China-Laos Railway and the Jakarta-Bandung High-Speed Railway, the digital RMB is deeply integrated with Beidou navigation and quantum communication to build a "Digital Silk Road". When European car companies use digital RMB to settle freight through the Arctic route, China is using blockchain technology to increase trade efficiency by 400%. This virtual-real strategy makes the US dollar hegemony feel a systemic threat for the first time.

Today, 87% of countries in the world have completed the adaptation of the digital RMB system, and the scale of cross-border payments has exceeded 1.2 trillion US dollars. While the United States is still debating whether digital currency threatens the status of the US dollar, China has quietly built a digital payment network covering 200 countries. This silent financial revolution is not only about monetary sovereignty, but also determines who can control the lifeline of the future global economy!


👉 This is very big news  It means De-dollarisation in a big way. It can completely re-set the world

人民币悄悄开始东南亚区块链数字化。

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This wave of "de-dollarization" made the Bank for International Settlements exclaim: "China is defining the rules of the game in the era of digital currency."

数字人民币：中国经济复苏和未来全球经济领导力的关键

复旦大学国际金融学院

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应对疫情下的经济衰退，中央政府调控经济的“军火库”中可动用的一项关键潜在“武器”是由中国人民银行在2019年底宣布的数字人民币（Digital RMB）。作为由二十国集团（G20）成员国 ...

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Abuse of hegemony is why de-dollarisation is trending

 US itself is accelerating the de-dollarization process

 De-Dollarization and the Fall of American Hegemony

Ever since the Fed ended its ultra-loose monetary policy and turned to a radical rate hike approach, the international financial market has been in turmoil with many currencies depreciating sharply. That has forced many countries to diversify their foreign exchange reserve assets. – AP

 

MARKET expectations for the Federal Reserve to end interest rate hikes have picked up as core inflation data in the United States has dropped and the University of Michigan’s consumer confidence index fell from 67 in February to 62 in March – yet worries abound about the outlook for the US economy.

Former US Treasury secretary Larry Summers said recently that it is too early to say that the US has shaken off the financial woes caused by its rapid interest rate hikes. The US economy is likely to experience a serious recession as a result of the recent banking crisis, with little chances of a “soft landing”. With recession expectations picking up, the factors supporting a strong US dollar are disappearing.

Ever since the Fed ended its ultra-loose monetary policy and turned to a radical rate hike approach, the international financial market has been in turmoil, with many currencies depreciating sharply. That has forced many countries to reduce holdings of US Treasuries, diversifying foreign exchange reserve assets.

In mid-march, Russia’s central bank reported that the ruble and “friendly” currencies together accounted for 52% of Russian export settlements at the end of 2022, surpassing the share of the US dollar and euro for the first time on record.

The members of Asean agreed at the end of March to strengthen the use of local currencies in the region and reduce reliance on major international currencies in cross-border trade and investment. On April 1, India and Malaysia agreed to settle trade in Indian rupees.

Data show that the proportion of US dollar reserves and assets in global central banks’ foreign exchange reserves has dropped from 65.46% in the first quarter of 2016 to 59.79% in the third quarter of 2022.

Despite its declining status, the US dollar still accounts for the largest share of global trade settlement, central banks’ foreign exchange reserves, global debt pricing, and global capital flows. However, the abuse of the US dollar hegemony has led many countries to launch a “de-dollarisation” campaign. The more the US dollar is used as a weapon, the faster it will be abandoned by other countries.

It’s unrealistic that some in the United States want to safeguard the benefits brought by the US dollar as a leading international currency, but don’t want to shoulder corresponding international responsibilities. – China Daily/Asia News Network

 

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Global de-dollarisation fast underway; US Printed More Money in One Month Than in Two Centuries, US$ is fast becoming Banana Currency

Changing trend: Looking from the perspective of the US debt, the 22 consecutive months from April 2018 to March 2020 saw global central banks reduce their US debt holdings.

A global trend toward “de-dollarisation” has already begun. The last piece of “load-bearing wall” of the “US Empire State Building” has cracked, in other words.

Global policies for “de-dollarisation” include sharply reducing US debt holdings, dropping US dollar’s status as an anchor currency, increasing non-dollar bulk commodity trade, growing the reserve of non-dollar currencies and ramping up gold’s hedge against the dollar.

Looking from the perspective of the US debt, the 22 consecutive months from April 2018 to March 2020 saw global central banks reduce their US debt holdings.

In March, the US Federal Reserve pledged unlimited quantitative easing, purchasing over US$1 trillion Treasuries within a month.

The Federal Reserve has become the largest receiver of US Treasuries.

In the same month, yields on both one-month and three-month Treasury bills were negative, while the yield for the 10-year Treasury hit below 1% for the first time, according to media reports.

This exemplifies global anticipation of a weaker US economy.

Although the possibility that a small number of foreign investors will increase their holdings of US Treasuries in the short run cannot be ruled out, in the long run international investors will likely reduce their US debt holdings.

The Federal Reserve, which has spent over half a century building up its global credibility, has become the last ditch of US Treasuries.

In recent years, many G20 members such as China, France, Germany, and Russia have reduced their use of the US dollars in trade deals.

According to information disclosed by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the share of US dollars in the international payment market in May was 40.88%, a drop from 44.1% in March.

While the market estimates there is still a long way to realise “de-dollarisation”, some countries are becoming restless to achieve it.

The SWIFT system, which has been traditionally used for trade clearance and payments, and which is overwhelmingly controlled by the United States, has been widely criticised across the world.

Many countries are striving to construct de-dollarising payment systems. For example, China launched the Cross-border Interbank Payment System in 2015.

It is very likely that the share of US dollars in international payment systems will drop to below 40%.

The share of the US dollar in total foreign exchange reserves of all IMF member countries has fallen from 72% in 2000 to 61.99% at the end of the first quarter in 2020.Although the US dollar’s share of foreign exchange reserves still ranks first worldwide, its decline in recent years is quite obvious.

Countries are determined to diversify their foreign exchange reserves.

It can be seen that central banks of many countries have increased their gold reserves, and the year 2019 marked the 10th consecutive year of annual net purchases of gold.

To offset risks brought by US dollars, the US share in global gold reserves fell from 23.64% at the end of June 2019 to 15.5% at the end of June 2020.

This reflects the weakening of trust in the US dollar by many countries.

It is conceivable that the US sanctioning against China due to the country’s national security legislation for Hong Kong will further accelerate most countries’ “de-dollarisation” programmes.

In addition to US Treasuries, payments as well as foreign reserves, digital currency and the Covid-19 pandemic are the latest factors that trigger the hastening of the “de-dollarisation” progress.

Digital currency seeks a comprehensive replacement of the US dollar as the primary international currency in terms of issuance, technology and tools.

Major economies including China, the EU, and Japan, plus many multinational corporations, have conducted long-term digital currency research.

Since the beginning of the 21st century, many doubters of “de-dollarisation” have been holding that global “de-dollarisation” is still in its infancy.

They feel markets are very dependent on the US dollar. But the Covid-19 pandemic seems to have triggered a faster “de-dollarisation” progress.

In view if the various diplomatic considerations and the market’s expectations for the US dollar, one can conclude that the United States can never form a strategic containment circle against China.

China is confident of this.

By Wang Wen,The author is professor and executive dean of Chongyang Institute for Financial Studies at Renmin University of China, and executive director of China-US People-to-People Exchange Research Centre. His latest book is Great Power’s Long March Road.wangwen2013@ruc.edu.cn. Chongyang Institute for Financial Studies is a private think tank set up by Qiu Guogen, an alumni of Renmin University and chairman of Shanghai Chongyang Investment Group Co Ltd.

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US Printed More Money in One Month Than in Two Centuries

The Federal Reserve’s money printer has cranked up to ridiculous levels — but will it really lead to inflation?

 

In a letter to investors released on July 29, Pantera Capital CEO Dan Morehead noted that the United States has printed a shocking amount of money to combat the pandemic-induced financial crisis.

“The United States printed more money in June than in the first two centuries after its founding,” Morehead wrote. “Last month the U.S. budget deficit — $864 billion — was larger than the total debt incurred from 1776 through the end of 1979.”

Morehead made it clear that Pantera Capital sees Bitcoin as the solution for the current crisis. He also contrasted the effects of money printing in recent months, to how the equivalent amount of currency had performed across centuries:

“With that first trillion [USD printed] we defeated British imperialists, bought Alaska and the Louisiana Purchase, defeated fascism, ended the Great Depression, built the Interstate Highway System, and went to the Moon.”

Morehead cited the resulting inflation as the main reason one should “get out of paper money and into Bitcoin.” According to the CEO, “there is no need for inflation-adjusted numbers [with Bitcoin] because there is no inflation/hyper-inflation.”

Going to zero

Goldbug Peter Schiff is also concerned about the effects of money printing. He noted comments by the Chair of the Federal Reserve, Jerome Powell, who said this week that the Fed was using its “full range of tools” to respond to the pandemic: printing money, keeping interest rates close to zero, and making asset purchases steady at $120 billion per month.

“The U.S. is about to experience one of the greatest inflationary periods in world history,” Schiff said on Twitter. “Any credibility the Fed has left will be lost. Federal Reserve Notes soon won't be worth a Continental.” (Continental paper money in the U.S. was at one time exchanged for treasury bonds at 1% of its face value.)

Inflated prices as well?

Despite widespread fears over inflation, many experts predict consumer prices will actually go into a period of deflation — and that’s exactly what’s happened in Australia this week where ABC News reported that consumer prices in the country actually dropped 1.9% in June. It’s a record for deflation since the Korean War.

However many pundits believe the inflation is actually hidden in asset prices, rather than consumer prices, and that money printing has underpinned the share market rally in the midst of the pandemic.

Pantera Capital revealed its simple investment strategy for riding out the pandemic:

“Stay long crypto until schools/daycare open. Until then the economy won’t function and money will be continuously printed.”

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