first, how did the dollar become the world currency? As early as after World War II, the United States became the world's largest power. With its strong economic and military strength, the US dollar replaced the British pound as the world currency. That is to say, before the dollar, the international currency was the pound. This means that the United States was the first world power at that time. This power does not refer to one item such as economy and military affairs, but comprehensive national strength, including economy, science and technology, military affairs, culture and education. If only one item reaches the first place in the world, it will not work. As early as the end of the 19th century, the total economic output of the United States surpassed that of Britain, but it was not until 5 years later that the United States became the world's largest power, and then the dollar completely replaced the pound as the international currency.
In fact, China has been trying to internationalize RMB since 27. After more than ten years' efforts, RMB has become the third largest currency for special drawing by the International Monetary Fund. At the same time, China's capital projects are being further opened, such as allowing foreign investors to invest in the A-share market through QFII and RQFII, and relaxing restrictions. China has opened free trade zones in Shanghai and Hainan, and more importantly, we have established RMB-denominated ones in Shanghai. Recently, dozens of countries have proposed to use the RMB as a reserve currency. If the RMB is digitized again this time, it will be very conducive to promoting the internationalization of the RMB.
Although the digitalization of RMB can promote the internationalization of RMB, there is still a long way to go before RMB can replace USD as an international currency. First, there is still a big gap between RMB and USD, especially RMB accounts for less than 2% of international trade currency settlement, while USD accounts for more than 4%, ranking fifth in the world, not only lower than USD, but also lower than Euro, Pound and Japanese Yen.
Second, in the global foreign exchange reserves, the RMB only accounts for about 2%, while the US dollar is in a dominant position, accounting for more than 6%. Similarly, the RMB only ranks fifth, lower than the euro, the Japanese yen and the British pound. Therefore, it will take a long time for the RMB to replace the US dollar as an international currency. Third, there is still a big gap in comprehensive strength. Although China's GDP has reached 7% of that of the United States, and great progress has been made in military, politics, science and technology, education, culture and talents, there is still a certain gap compared with the United States, the only superpower today. Even if our economic aggregate exceeds that of the United States in a few years, our comprehensive national strength may not surpass that of the United States at once, but we need to continue to work hard.
In the near future, China is likely to become the first country in the world to introduce digital currency, which will give the existing currency market a head start when the RMB is digitized, and it is of great significance for China to expand the influence of RMB in the world. However, it will take some time for RMB to completely replace the US dollar as an international currency. Because now, no matter from the international settlement currency or the reserve currency, the proportion of RMB is not high. At the same time, China should strive for the first place in the world in comprehensive national strength, including military, economic, cultural, educational and human resources. We are convinced that it is only a matter of time before the RMB surpasses the US dollar to become the world currency, and the international influence of the RMB will certainly gradually surpass the US dollar.