The US dollar and the Chinese yuan have been fighting over the status of the main reserve currency. No expert dares to predict the winner in this battle. China seems to know the outcome in advance. So, Beijing is determined to squeeze the greenback out of the domestic financial sector. The first step in de-dollarization is scrapping payment systems pegged to the US currency.

According to Fang Xinghai, a Vice Chairman at the Securities Regulatory Commission, China is fully aware of the risks of being disconnected from the pro-American payment systems in case the US imposes sanctions on China’s companies and banks. Citing the official, China’s financial sector is too reliant on such systems which make it vulnerable to looming US sanctions. The backbone for international trade and investment is SWIFT used for international financial messaging and CHIPS used for clearing interbank transactions.   

The Securities Regulatory Commission foresees the prospects of the US dollar’s broad-based weakness. Fang Xinghai fears that the weaker US dollar could pose a threat to China’s economy. To cushion the national economy, the top official suggested that Beijing’s non-financial investment worth $2 trillion which is being stored in foreign accounts should be converted into the renminbi.