The author of this article is Mei Xinyu, a researcher at the Academy of International Economic Cooperation of the Ministry of Commerce of China.
There is no doubt that one of the biggest changes brought about by the Russia-Ukraine conflict to the global economy is that it has triggered a wave of "de-dollarization" that has spread to many countries.
The dollar is our currency, but your problem" (Connally, then Secretary of the Treasury of the United States in the 1970s) - even without the Russia-Ukraine conflict, many countries around the world have a strong internal need for "de-dollarization" in recent years, because during the outbreak of the new crown epidemic, the fiscal and monetary policies of various countries "released water", which inevitably followed by the tightening of monetary policy.
The sharp tightening of monetary policy by major Western banks usually brings a series of shocks such as deterioration of the balance of payments, soaring inflation, and sharp depreciation of the local currency exchange rate to many emerging market economies, which in turn leads to a significant downturn in the entire national economy, which is the ...... of the saying "the old developed countries cut the leeks of emerging market economies".To get out of this predicament, these affected countries objectively need to have the currencies of non-Western countries as the international ** denominated settlement currency, so as to help them break through the foreign exchange gap.
The outbreak of the Russia-Ukraine conflict and the Western camp's all-round bottomless sanctions frenzy against Russia have strongly promoted the intrinsic "de-dollarization" motivation after the new crown pandemic and set off this wave.
In the Western sanctions against Russia, the freezing and confiscation of the overseas assets of the Russian state and its citizens, as well as the expulsion of Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, these two actions that can be called "financial nuclear sanctions" have greatly damaged the international community's trust in the security of the US dollar as an international currency, and strongly stimulated other countries to seek non-US dollar currencies as international payment and settlement currencies, and establish and expand international reserves of non-US dollar currencies. and accelerating the construction of a SWIFT-independent system for the transmission of financial information and payment and clearing systems, even for the European allies of the United States.
As a member of the "five permanent members" of the UN Security Council and one of the world's leading nuclear powers, how can the vast majority of other countries believe that they will be spared? And how can you not expect to work hard to get out of this situation of "people are swordsmen, I am fish and meat"?
This sudden expansion of demand, in turn, has greatly enhanced the economies of scale, scope and operational efficiency of the non-US dollar currency payment and settlement system, and accelerated its development to a shorter and longer period of time than the US dollar payment and settlement system.
Coupled with the rounds of unconventional fiscal and monetary policies experienced by the core currency countries in recent years, all the bottom lines of fiscal and monetary discipline that they once boasted of have been trampled on again and again and even abolished, and the international motivation to seek alternative systems will inevitably continue to increase substantially.
In the history of the world economy, large-scale financial sanctions have often given rise to new financial systems; This substitution process will be accelerated if, in addition to the hegemonic countries that impose financial sanctions, there are countries that have reached a level of economic and financial strength and financial infrastructure development.
Although the current wave of "de-dollarization" is not small, nothing will develop in a straight line, and "de-dollarization" is no exception.
The internationalization of the renminbi is also unlikely to happen overnight. On October 27 last year, the People's Bank of China (PBoC) released the 2023 RMB Internationalization Report. The report points out that since 2022, the internationalization of the renminbi has made steady progress, showing a series of new progress and changes. The ability of cross-border RMB business to serve the real economy has been enhanced, the function of RMB financing currency has been enhanced, and transactions in the offshore RMB market have become more active.
According to the report, according to the International Monetary Fund (IMF), as of the end of 2022, the scale of RMB reserves held by global central banks was US$298.4 billion, accounting for 269%, an increase of 1. compared with 2016, when the RMB first joined the SDR62 percentage points, ranking fifth among major reserve currencies. According to incomplete statistics, more than 80 foreign central banks or monetary authorities have included the renminbi in their foreign exchange reserves.
In the next stage, the People's Bank of China (PBoC) will promote the internationalization of the RMB in an orderly manner on the basis of market-driven and independent choices of enterprises. In this process, it is necessary to improve the macro-prudential management framework for cross-border capital flows integrating domestic and foreign currencies, improve the ability to prevent and control risks under the conditions of opening up, and maintain the bottom line of no systemic risks.
Although the ultimate goal of the "de-dollarization" wave is to replace the US dollar international reserve currency situation, this process is destined to be full of difficulties, and emerging international currencies need to maintain their best surpluses with the United States and Europe for a long time in order to maintain market confidence in this emerging international currency; For this reason, it is inevitable to increase dollar reserves to a certain extent in a certain period of time, which is the dialectic of "de-dollarization".
Editor: Peng Jiang Editor: Deng Minguang.
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