Three-polar currency world to become reality? (rs)
08-06-2023 16:36
Three-polar currency world to become reality?
Three-polar currency world to become reality?

According to economists, the dominance of the US dollar as the world's reserve currency has been shaken. Currently, there are no big threats to its hegemony but in the near future it could be kicked off the pedestal by two leading currencies – the yuan and the euro.

Stephen Jen, the CEO of asset management firm Eurizon SLJ, reckons that a multi-polar international monetary system could unfold over the next two decades. The US dollar will lose its supremacy as the yuan and the euro will compete for first place. Given the emergence of Asia as the world economy’s powerhouse, the yuan is highly likely to succeed in this battle.

The greenback's share of global foreign-exchange reserves has significantly decreased. "USD is losing its market share as a reserve currency at a much faster rate than is commonly believed. After steady declines in its global market share for the past two decades, in 2022 the dollar lost market share at a pace 10 times as rapidly," Stephen Jen pointed out. Despite the economic woes worldwide, the US dollar still holds the status of a global reserve currency. However, it could share the throne with other currencies in the near future. "The US shouldn’t kid itself, things could change, and quicker than Washington might appreciate," he said.

The euro and the yuan have the highest chances to replace USD. However, there are certain difficulties when it comes to the yuan. It might become the strongest currency only if China's financial sector becomes more stable. At the moment, the recovery of China’s economy is somewhat bumpy. Hence, foreign investors avoid buying Chinese stocks and bonds. Besides, the government controls capital inflows, lowering the chances of the yuan being a strong and competitive currency on Forex.

In March 2023, the yuan overtook the US dollar as the most used currency for Chinese cross-border transactions for the first time. However, most countries prefer the euro when making cross-border settlements.

Some central banks are ditching the US dollar, choosing gold as a hedge against risks. Despite an increase in trading settlements in yuan and euro, both currencies cannot compete with gold.

  • Grand Choice
    Contest by
    InstaForex always strives to help you
    fulfill your biggest dreams.
  • Chancy Deposit
    Deposit your account with $3,000 and get $3000 more!
    In September we raffle $3000 within the Chancy Deposit campaign!
    Get a chance to win by depositing $3,000 to a trading account. Having fulfilled this condition, you become a campaign participant.
  • Trade Wise, Win Device
    Top up your account with at least $500, sign up for the contest, and get a chance to win mobile devices.
  • 100% Bonus
    Your unique opportunity to get a 100% bonus on your deposit
  • 55% Bonus
    Apply for a 55% bonus on your every deposit
  • 30% Bonus
    Receive a 30% bonus every time you top up your account
Ne možete da razgovarate sada?
Postavite pitanje kroz ćaskanje.
Widget callback