General

With the continuous development of the economic strength of countries around the world, the proportion of the US economy in the world has gradually declined, from 56% in 1945 to 24.27% today. Especially in the Russia-Ukraine conflict, Russia's "dollar ban" effectively countered the US financial sanctions against Russia, and also made the world see clearly that the US dollar has its limitations.

On July 21, the "Notice on Supporting Cross-border Renminbi Settlement in New Formats of Foreign Trade" recently issued by the People's Bank of China was officially implemented. Industry experts said that the hegemony of the US dollar will be further weakened by then, and the diversification of world settlement currencies may enter the fast lane.

The main contents of the "Notice" include: First, increase support for new foreign trade formats, and improve policies related to cross-border RMB business in new foreign trade formats such as cross-border e-commerce. The second is to expand the scope of cross-border business of payment institutions from trade in goods and trade in services to all current accounts. The third is to clarify the business development and filing requirements of relevant business entities such as banks and payment institutions. The fourth is to clarify the requirements for business authenticity review, anti-money laundering, anti-terrorist financing, anti-tax evasion, and data reporting, consolidate the business development responsibilities of banks and payment institutions, and prevent and control business risks. The "Notice" will come into force on July 21, 2022.

From the 21st, 1.4 billion people in China, 140 million people in Russia, 1.4 billion people in India, 220 million people in Pakistan, 80 million people in Iran, 600 million people in ASEAN, plus some non-European countries, the number of people using non-US dollar payment systems can be Easily exceeded 4 billion.

The RMB settlement order issued by the People's Bank of China this time may become another historical node that accelerates the decline of US dollar hegemony.

Since Russia called for the establishment of its own currency settlement system among the BRICS countries, countries have also taken action. Venezuela has issued a digital currency anchored to oil; Iran will no longer use the US dollar but will settle oil in RMB; the Pan-African payment and settlement system was officially released in Accra, the capital of Ghana, and the system will be widely used in the African continent; Brazilian presidential candidate Lu Latin America called on Latin American countries to get rid of their dependence on the US dollar and establish a currency "Sur" belonging to Latin America; the five major ASEAN economies, namely Malaysia, Indonesia, Thailand, Singapore, and the Philippines, reached a consensus at the G20 Finance Ministers and Central Bank Governors Meeting , plans to sign an agreement in November to set up a regional integrated payment network; Australia's recent iron ore transaction with China was settled in yuan, and the transaction was accompanied by the official establishment of China's BHP Billiton Shanghai branch; India's central bank launched a A new mechanism for international trade settlement in Indian rupees announced with immediate effect…

Russian Presidential Assistant Maxim Oreshkin said on July 16 that the Russian government plans to establish a foreign economic and trade system to eliminate the need for payments through the SWIFT interbank system, and is negotiating with China and Turkey to develop new Mechanisms.

Oreshkin emphasized that Russia will not become a closed economy; on the contrary, it intends to openly cooperate with any external country, but this requires reliable financial institutions. "We're seeing a big increase in the volume of transactions in the renminbi, and also in the ruble, and this will be done step by step, and we'll come up with mechanisms that will further simplify this process."

The analysis pointed out that with the contraction of the Fed's monetary policy, the global dollar liquidity began to flow back. As one of the international reserve currencies, the RMB can fill the market vacancy of the return of the US dollar to a certain extent.

In the first four months of this year, my country’s cross-border RMB receipts and payments for trade in goods totaled 2.2 trillion yuan, a year-on-year increase of 26%, accounting for 16% of cross-border receipts and payments in RMB and foreign currencies for trade in goods, an increase of 1.3 percentage points from the end of last year; The scale of cross-border receipts and payments of direct investment in RMB totaled 1.9 trillion yuan, a year-on-year increase of 19%, accounting for 66% of cross-border receipts and payments of direct investment in both domestic and foreign currencies.

The central bank stated that it will steadily promote the implementation of the "Notice", provide good supporting financial services for market players of new foreign trade formats, and effectively play the positive role of cross-border RMB business in serving the real economy and promoting the high-quality development of new foreign trade formats. Support and guide The healthy and continuous innovation and development of new business forms and new models of foreign trade help stabilize the macroeconomic market.

According to industry analysts, at a time when the U.S. dollar rate hike cycle is beginning, economic recession is expected to rise, and commodities fluctuate violently, the RMB should seize the opportunity to innovate the current world monetary system, and actively strengthen the pricing and pricing of commodities in global settlements. The influence on the global capital market will gain a greater voice.