"decoupling" from the dollar
After the outbreak of the financial crisis, countries have put forward suggestions to reform the global monetary system dominated by the dollar from their own interests. A few days ago, some countries have put it into practice.
It is worth noting that the position of the US dollar in the global reserve currency has obviously declined, and correspondingly, the proportion of currencies such as the euro has increased. According to the report released by the International Monetary Fund (IMF) on September 30th, in the second quarter of this year, the proportion of the US dollar in global currency reserves has dropped to 62.8% of the lowest level in 10 years, while the proportion of the Euro has reached a record high of 27%. This shows that central banks have begun the process of diversification of currency reserves in the case of the continuous decline of the US dollar exchange rate.
On September 20th, the Iranian government announced that it would use the euro instead of the US dollar as the foreign exchange reserve currency. Iran's central bank adjusted its foreign exchange reserve assets structure and substantially reduced its holdings of US dollar assets. Russia, India, Brazil and other countries have also indicated that they will reduce the share of the US dollar in foreign exchange reserves.
In addition, the status of the dollar as a settlement currency has also been challenged by "decoupling". Nine members of the Latin American left-wing alliance "Bolivarian Alliance of American States" held a meeting in Bolivia on June 16, and agreed to create a regional currency "Sucre" for intra-regional trade, thus gradually reducing the use of US dollars.
In order to promote the development of economic and trade relations between China and neighboring countries and regions, avoid exchange rate risks and maintain the steady growth of foreign trade, China took the lead in developing cross-border trade and RMB settlement. Recently, in the Sino-Russian economic and trade dialogue, the two sides also discussed expanding the share of local currency in trade settlement.
Behind the "weak" dollar
Although the US Treasury Secretary has repeatedly stressed that a "strong dollar" is in the interest of the United States, the downward trend of the dollar has challenged its status.
Analysts pointed out that the weakening of the "safe haven demand" of the US dollar, the low interest rate policy of the Federal Reserve and the "twin deficits" problem in the United States all restricted the strength of the US dollar. What needs more attention is that during the financial crisis, the US government injected a lot of money to stabilize the economy, which increased the government's fiscal deficit and led to the lack of an effective exit mechanism. At present, it is becoming the driving force for the depreciation of the US dollar.
Arbitrage also severely hit the dollar, increasing the depreciation pressure of the dollar. Zhang Ming, deputy director of the International Finance Office of the Institute of World Economics and Politics of China Academy of Social Sciences, pointed out that from the perspective of global capital flows, after the crisis, some short-term international capital will withdraw from the US Treasury bond market and re-enter the risk asset market. The upsurge of dollar arbitrage naturally increases the pressure of dollar depreciation.
However, from the perspective of maintaining the world reserve status of the US dollar and maintaining the purchasing power of the US dollar, it is unlikely that the US dollar will continue to fall sharply. Zhang Monan, an associate researcher at the National Information Center, believes that a sharp depreciation is tantamount to a devastating blow to the status of the US dollar as an international reserve currency, but a trend, rhythm and small depreciation can not only achieve the purpose of reducing real debts, but also maintain the initiative of the US dollar's self-adjustment and realize the "maximization of its own economic interests" in the United States.
The game between multipolar currency and dollar
For the future international monetary system, French President Nicolas Sarkozy, Russian President Dmitry Medvedev and World Bank President Zoellick all said that the multipolar world political and economic structure will be reflected at the monetary level sooner or later, and the multipolar world cannot be based on a single international currency. On the basis of this, more currencies will become an alternative choice for the US dollar in the future.
However, analysts also pointed out that there is great uncertainty in the evolution of the international reserve currency pattern. To become an international reserve currency, a currency must have three basic conditions-stable currency value, low transaction cost and high transparency. At present, there is no more practical dominant currency choice except the US dollar.
Tan Yaling, executive director of China Institute of International Economic Relations, believes that the short-term price fluctuation of the US dollar is a strategy and technical application, which does not mean the disappearance of the long-term value of US dollar investment. The American-style financial crisis will strengthen the dominant currency position of the US dollar, and the trend that the US dollar has been dominant will be hard to change and will continue. The dollar crisis theory will lag behind and will not come in the short or medium term. The dollar market mechanism, share ratio and influence in the next 10-20 years are difficult to fundamentally eliminate and replace.
Zhang Ming, deputy director of the International Finance Office of the Institute of World Economics and Politics of China Academy of Social Sciences, believes that although the euro is widely valued, the structural problems of the euro zone economy and the difficulty of realizing a unified fiscal and monetary system still cast a shadow over whether the euro can truly become the world's major reserve currency. Until the Japanese economy really gets out of the downturn that lasted for nearly 20 years, the outlook for the yen remains bleak. For emerging market countries, it is a more realistic choice for domestic currencies to grow into regional currencies first.