Threat To US Dollar Dominance: Is the dominance of the world’s most powerful currency US Dollar (US Dollar) about to end? Is international trade through dollar going to be challenged? This question is becoming stronger after the visit of Chinese President Xi Jinping to Russia. Challenging the supremacy of the dollar during the visit of the Chinese President, Russian President Vladimir Putin said that Russia is in favor of settlement in the Chinese currency Yuan with Asian, African and Latin American countries.
Through this effort, China and Russia, the world’s largest energy exporter, want to end the threat of the dollar in the global financial system. And if this happens, it will be the biggest blow in the history of America because America has been using the dollar as its biggest weapon against the whole world. America occupies 20 percent of the world’s output. 60 percent of the foreign exchange reserves kept in global central banks are in dollars, although 20 years ago it used to be 70 percent. International trade is also done through dollars only.
Dollar gives America its greatest power on the global political and economic stage. America can impose economic sanctions on any country and can isolate that country economically in the world. US laws including the International Emergency Economic Powers Act, the Trading With the Enemy Act, and the Patriot Act give the US the power to use the payment system as a weapon. does. America controls the supply of currency all over the world.
SWIFT (Society for Worldwide Interbank Financial Telecommunication) which is a global messaging payment system establishes the dominance of the US dollar in the world’s economic activity. Apart from SWIFT, China and Russia want to create a separate international payment system. After Russia’s attack on Ukraine and the tension between China and America, this issue is gaining more momentum and efforts are being made to challenge the dollar.
The Central Banks of Russia and China are now keeping less foreign exchange reserves in the form of dollars and are doing transactions in Yuan. Russia and China are also trying to persuade other countries to adopt Yuan for trade. Russia and China feel that through this, America and its powerful currency dollar can be given the biggest challenge and America’s economic power can be hurt.
Although there are many solid reasons for this supremacy of the dollar. The global economy needs a single currency that is stable and easily available. You can transact anytime through that currency. Market should control the value of currency and not any country. This is what makes the dollar unique and special, and this is the reason why it will not be easy for the Chinese Yuan to challenge the supremacy of the dollar.
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