Since the beginning of this year, the wave of "dollarization" can be said to be one after another. China and France settled the first LNG order in RMB, China and Brazil settled in local currency, the ten ASEAN countries discussed the settlement in local currency, and Argentina settled the goods imported from China in RMB.
Such a big battle is likely to start a prairie fire. So, is the status of the dollar beginning to waver?
Some time ago, SWIFT released the ranking of global payment currencies in March, and the top five were still USD, EUR, GBP, JPY and RMB.
Specifically, the share of US dollar payment reached 4 1.74% in March, up 0.64 percentage points from last month, up 0.67 percentage points from the same period in 2022 and up 2.3 1 percentage point from the same period in 2026.
In other words, the share of dollar payment has been greatly improved in the past two years, and its status seems to be more stable. What the hell is going on here? Didn't you say you wanted dollars?
In fact, the reason is very simple. From March last year to May this year, the Federal Reserve raised interest rates 10 times, with a cumulative increase of 500 basis points, and the federal funds rate continued to increase.
The operation of raising interest rates in the United States is to harvest the wealth of all countries. Interest rates rose, and various funds returned to the United States, supporting the continued strength of the dollar.
Argentines use RMB to settle goods imported from China, while goods exported to China are settled in US dollars in order to obtain US dollars. Because after being harvested by the United States, Argentina's dollar reserves are very small, and it is impossible to buy more things. As of March this year, the accumulated inflation rate of Argentina in the past 12 months reached 104.3%.
Some analysts believe that if the Fed insists on continuing to raise interest rates, then the dollar will have a chance to usher in another positive, which means that its share of payment may continue to rise.
After announcing a 25 basis point rate hike on May 3rd, Federal Reserve Chairman Powell said that he would resolutely reduce the inflation rate to 2%. At present, the inflation rate in the United States is around 5%, which means that there is still the possibility of raising interest rates in the future.
Although the momentum of "dollarization" is great, the current proportion is still too low to shake the status of the dollar.
The share of dollar payment has increased, so who has decreased?
The data shows that in March, the payment shares of euro and pound were 32.64% and 6. 19%, respectively, down by 3.79 and 0.39 percentage points from the previous month and 2.72 and 0.28 percentage points from the same period last year.
The United States has gained and even spared its allies. Since 2022, inflation in Europe has been more serious than that in the United States due to the interest rate hike in the United States and the conflict between Russia and Ukraine. Coupled with the devaluation of the currency, a large number of enterprises and capital flowed into the United States. Throughout 2022, the euro depreciated against the US dollar 1 1%.
Britain has fallen behind. Last year, there were two prime ministers in succession. The economy is facing recession, and GDP has been surpassed by India. The reason why the pound still has such a high share depends entirely on the strong foundation accumulated in the past. After all, there are still many Commonwealth countries.
In addition, the share of Japanese yen payment was 4.78%, an increase of 1.8 percentage points from the previous month and an increase of 1.98 percentage points from the same period last year, which can be said to be the biggest winner.
What about the internationalization of RMB?
In March this year, RMB payment accounted for 2.26%, up 0.07 percentage points from the previous month and 0.06 percentage points from the same period last year, making it the fifth largest payment currency in the world.
Compared with the highest point, this share has declined. In February 2002165438, the share of RMB payment reached 2.7%, surpassing Japan and becoming the fourth largest payment currency in the world. The highest point is 65438+ 10 month in 2022, with a share of 3.2%.
Why did it fall? The reason should be that the CIPS system of RMB cross-border payment system is working hard.
From 20 10 to 202 1 0, the RMB internationalization index RII rose from 0.02 to 5.05. At present, RMB is the fifth largest payment currency, the fifth largest international reserve currency and the third largest trade financing currency in the world. In a decade or so, the RMB has gone from blank to becoming a major currency in the world, which can be said to have achieved very good results.
CIPS system was launched only in 20 15, and it developed rapidly. It has both settlement function and message information transmission function. With the increasing processing capacity, it will continue to help the internationalization of the RMB.
Is the dollar status hard to shake?
Regarding the status of the US dollar, some institutions and regions expressed their continued optimism. In June 2022, the European Central Bank released its annual report "The International Status of the Euro", which mentioned that the US dollar will still be difficult to be replaced by other currencies in the foreseeable future.
In addition, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), also said that no currency can replace the US dollar.
But is this really the case? Is the dollar really unshakable? The international status of a currency can be measured from three aspects: reserve, valuation and payment.
In fact, in the past 20 years, the proportion of the dollar has fallen sharply. As a foreign exchange reserve, the proportion of US dollar has dropped from 72% in 2000 to 59% in 2022. As a payment tool, the proportion of US dollars has also dropped from about 70% in 2000 to 4 1% now.
Since the establishment of the Bretton Woods system, the US dollar has been linked to gold and oil and has become the pricing currency of major commodities in the world. On June 5438+ 10 this year, Saudi Arabia expressed its willingness to sell oil in currencies other than the US dollar. Once oil is gradually not priced in dollars, it will deal a heavy blow to the status of dollars.
A banker in India called the US dollar the biggest financial terrorist in the world, and the whole world was "desperately looking for an alternative reserve currency". When more and more countries open up diversified currency reserves and establish local currency settlement mechanisms, the status of the US dollar will definitely be gradually shaken.
No currency will always occupy an absolute dominant position, and countries have long hated the long-term abuse of "weaponization of the dollar."
In China, we believe that "a single spark can start a prairie fire" and the wave of dollarization will not stop. America's obstinacy will eventually push the dollar into the abyss.