General

More and more trade settlement in local currency among countries, especially after the Russia-Ukraine conflict, Russia, ASEAN, Latin America and other economies have gradually begun to emphasize local currency settlement; Gold has become a sought after target for central banks in various countries; Emerging market countries are seeking greater autonomy in the international trading currency system... In recent years, the international trading currency system has been sparking a wave of "de dollarization", especially under the influence of factors such as changes in geopolitical and economic relations, the impact of the pandemic on global trade, the "politicization" of US foreign economic policies, and the aggressive rate hikes by the Federal Reserve. The process of "de dollarization" has further accelerated.

The special report released at the China Macroeconomic Forum (CMF) seminar on macroeconomic hot topics recently showed that under the wave of "de dollarization", the US dollar has undergone a series of new changes in the international monetary system: as of the end of 2022, the proportion of the US dollar in global reserves has dropped to below 59%, reaching its lowest value since 1995; The number of US bonds held by international investors reached a high of $7.74 trillion in 2021; The proportion of the US dollar in global trade settlement has increased from over 30% in 2010 to the current 40%, a decrease from the high point of 45% in 2015, but it is still at a relatively high level; The trading volume of the US dollar in the derivatives market has increased from 31.8% in 2010 to 43.5% currently, a significant decrease from 50% in 2016 and 2019, but still at its highest level.

Faced with such a situation, on the one hand, the United States maintains the hegemonic position of the US dollar by taking various measures; On the other hand, the changes in the US dollar itself and the changes in demand from peripheral economies are driving the transformation of the international trade currency system, and this dual game affects the direction of future development of the international monetary system.

The trend of international currency multipolarization cannot be changed, it is only a matter of time. In this process, the impact of new technologies is highly uncertain, but rapid changes and developments in geopolitics may accelerate the transition of the international monetary system to multipolarization, as the underlying relationship supporting the international monetary system is geopolitical relations. "In the view of Wang Jinbin, Executive Deputy Secretary of the Party Committee of the School of Economics at Renmin University of China and a major member of CMF, The deep evolution of economic multipolarity and geopolitical patterns has formed the economic and political foundation of monetary multipolarity.

Data shows that from 2016 to 2022, the proportion of the US dollar in global foreign exchange reserves decreased by 7 percentage points, with an average annual decrease of 1 percentage point. The share of losses in the US dollar is shared by other currencies, with the Chinese yuan accounting for the largest share, reaching 1.613%. In the past few years, the RMB has been the single currency with the fastest increase in the proportion of global foreign exchange reserves, which means that the internationalization of the RMB faces new opportunities.

Wang Yongli, General Manager of China International Futures Corporation, believes that with the profound changes in the world situation and the influence of geopolitics, interest groups need to form different and more balanced currency regions, which may give rise to a tripartite pattern of the US dollar, euro, and RMB.

The current turmoil should not be compared to the changes in the US dollar index that have occurred every decade in the past, as China's rise has triggered a turning point change. This change is different from the fluctuations in the US dollar's position in the past, and may even be equated with the impact of the US dollar gold decoupling event. "Liu Yuanchun, President of Shanghai University of Finance and Economics, former Vice President of Renmin University of China, and co-founder of CMF, believes that, The decline in the international status of the US dollar is not a sufficient and necessary condition for the internationalization of the RMB. In the process of RMB internationalization, China must maintain its fundamental position, especially to provide solid support for RMB transactions, payments, investments, reserves, etc., and steadily promote RMB internationalization, rather than simply filling the gap caused by the decline of the US dollar status to achieve internationalization.

At present, the internationalization of the RMB is based on trade. Currently, China has become the world's largest international trade exporter and second largest importer, but the proportion of assets and liabilities denominated in RMB in the world is still relatively low. "Wang Jinbin said that in the orderly process of promoting the internationalization of the RMB, China should adhere to prudent management and promotion of financial accounts, and increase the settlement of trade denominated in RMB, Expand opening up to the outside world and orderly promote the internationalization of the RMB under the overall tone of seeking progress while maintaining stability. In the future, we will gradually match China's economic and geopolitical influence with monetary influence, and there is still great room for growth in the internationalization of the RMB.

Other experts and scholars attending the meeting also proposed suggestions for the next step in promoting the internationalization of the RMB, mainly including: continuing to comprehensively deepen reform and expand opening up to the outside world, ensuring stable economic growth, which is the foundation of RMB internationalization; Expand the use of the RMB in foreign trade and investment; Actively promote the reform and opening up of the financial market, especially accelerate the opening up of the treasury bond market, and accelerate the development of the RMB foreign currency derivatives market; Accelerate the market-oriented reform of the exchange rate system and enhance the flexibility of the RMB exchange rate; Further optimize the business environment; Actively participating in global economic and financial governance; Explore international trade and investment application scenarios of digital RMB.