General

Why is international trade only settled in US dollars, and when can the Chinese yuan replace the US dollar? Firstly, currency settlement refers to the payment method in international trade. For example, if you purchase a batch of goods from a Japanese company and the other party requires you to settle the bill in US dollars, otherwise the shipment will be rejected. And if the company purchases goods from you, you will also require the other party to settle the account in US dollars.

The reason why both parties insist on settlement in US dollars is because neither party recognizes the value of the other party's currency, and everyone only trusts the US dollar, which is caused by various factors.

The currency used in modern countries is mostly paper currency, which is simply a piece of paper. Its value is completely artificially given, and whether a country's currency is strong or not depends on its comprehensive national strength.

Since the end of World War II, the United States has been the most powerful country in terms of economic strength and comprehensive national strength in the world, without one. At its peak, the Soviet Union was also inferior to the United States.

It is precisely due to the strength of the country that the US dollar has replaced the British pound as the main currency for international trade. Even today, countries around the world still have a high level of recognition for the US government and the US economy, so their recognition of the US dollar is also high. Even some countries that are hostile to the United States prefer to accept the US dollar in international trade settlements, or even only accept the US dollar.

In the past thirty or forty years, only two currencies have threatened the US dollar, the Japanese yen and the euro.

In the 1980s, the Japanese economy became the world's second largest economy, with a total economic output of 60% of that of the United States. The Japanese yen was the only currency at that time that could catch up with the US dollar.

However, after entering the 1990s, due to economic policy mistakes, the Japanese economy suffered huge setbacks and the credibility of the yen plummeted.

In addition, during the 1997 Asian financial crisis, the Japanese government was irresponsible and took the lead in announcing the depreciation of the yen, causing Southeast Asian countries to abandon their yen reserves, thus putting an end to the internationalization of the yen.

In addition to the Japanese yen, the euro has also threatened the US dollar, and the threat of the euro to the US dollar is much greater than that of the yen to the US dollar, because the economic strength of the European Union is on par with the United States, and the trade volume is also on par with the United States. The impact of the euro on the US dollar is quite significant.

But the problem is that the EU is not a sovereign country, and the level of economic development and financial and fiscal policies of each country are not equal. The uncoordinated pace greatly hinders the development of the euro. In particular, the Greek sovereign crisis has had a great impact on the euro, in which the United States has not done little damage to the European Union.

However, even so, the euro is still the world's second largest foreign exchange reserve currency. However, compared to its youthful beginnings, the euro has disappeared from the crowd, and the goal of replacing the US dollar or sharing the benefits with the US dollar is becoming increasingly distant.

As for RMB, it is currently impossible to replace the US dollar. Internationalization of RMB is a long-term process, and it is impossible to achieve it overnight.

By the way, if you travel to Japan, South Korea and other places, you can use Alipay and WeChat payment, so many people are happy to think that RMB can already be used for overseas payment.

However, in fact, Japan and South Korea do not accept RMB payment. The reason why Alipay and WeChat can be used for payment is that Alipay and WeChat have changed RMB into Japanese yen and Korean won at the same time of payment. The money received by the store is also the local currency, not RMB.

If you don't believe it, you can directly take RMB to the other party and see if they accept it or not.

Of course, not only the RMB, but the US dollar cannot be directly used in Japan. In fact, any government that can operate normally will not allow foreign currencies to be directly used in the country, which is a challenge to the financial order of the country.

However, compared to other currencies, the convenience of the US dollar lies in its ability to freely exchange with other currencies at any time, which is an important manifestation of the international trade currency of the US dollar.