๐ Banks and companies are shifting to transact in yuan, euros, UAE dirhams, instead of using USD as before.
๐ Why avoid the dollar?
- Trade tensions.
- Afraid of the dollar being weaponized through sanctions.
- Modern technology makes cross-border transactions easier.
- The share of dollar transactions is expected to decrease by about 6% by 2025.
๐จ๐ณ China is promoting the internationalization of the yuan.
- In March 2025, the yuan will account for 4.1% of total global transactions โ still small compared to 49% of the USD, but steadily increasing.
- China's cross-border payment system (CIPS) reached 175 trillion yuan/year, an increase of over 40% from the previous year.
๐ Who is using the yuan?
- European automakers are using yuan to hedge against risks.
- Banks in Indonesia have set up dedicated desks to handle rupiah โ yuan transactions.
- China signed currency payment agreements with Brazil, Indonesia, UAE...
๐ช Why is this trend important?
- For a long time, the USD has been used as an intermediary for most transactions.
For example: An Egyptian company wants to exchange Philippine pesos โ must buy USD โ then can buy pesos.
- Now many companies want to skip the USD intermediary step to save costs and avoid risks.
๐ The dominance of the dollar is shaking.
- According to Deutsche Bank, if nothing changes, the USD will maintain its position.
- But currently, there are groundbreaking changes happening.
- This is the first time in decades that the role of the USD is facing real challenges.
๐ฅ Mr. Trump also wants to accelerate this process.
- He frequently criticizes the Fed, claiming a strong USD is detrimental.
- He also values Stephen Miran โ a supporter of changing the global financial order.
In summary:
- Although the dollar will still be king, that position is no longer 'invulnerable.'
- If countries collectively avoid the dollar, the global financial order will undergo significant changes in the next 5โ10 years.
- What do you think if in the future, traveling requires carrying yuan instead of dollars?