The hegemony of the US dollar is coming to an end

According to data from the Society for Worldwide Banking and Telecommunications (SWIFT), in September this year, the Chinese yuan surpassed the euro in global trade financing and rose to second place globally, only behind the US dollar.

Specifically, the Chinese yuan accounts for 5.8% of global trade financing, the euro accounts for 5.43%, and the top ranked US dollar accounts for 84.15%. It is worth mentioning that since December last year, the proportion of the US dollar has been below 85% for nine consecutive months.

According to the latest International Capital Flow Report (TIC) released by the US Treasury Department, Japan reduced its holdings by $28.5 billion, China reduced its holdings by $27.3 billion, and the UK reduced its holdings by $29.2 billion in September. The top three "overseas creditors" all chose to reduce their holdings. In addition to selling US bonds, central banks around the world have also sparked a strong "gold buying frenzy", with 387 tons of gold purchased in the first half of this year, reaching a historic high.

On one hand, there is a sell off of US bonds, and on the other hand, there is an increase in holdings of gold, indicating a trend of de dollarization. According to media statistics, as of July this year, more than 110 countries around the world have adopted one or more forms of "de dollarization". From the perspective of settlement channels, more than 30 settlement systems have been established worldwide that can bypass the US dollar.

Although the US dollar remains the world's primary settlement and reserve currency, its hegemony is gradually being undermined, and de dollarization has become a trend. The trend of "de dollarization" is becoming increasingly apparent, and the speed of RMB internationalization is also getting faster. Last month, the People's Bank of China released the 2023 RMB Internationalization Report, which mentioned that "the internationalization of the RMB is steadily progressing, presenting a series of new developments and changes.".

Speaking of data, the total cross-border payment and receipt amount of RMB in 2022 was 42.1 trillion yuan, a year-on-year increase of 15.1%. Among them, the actual income was 20.5 trillion yuan, a year-on-year increase of 10.9%, and the actual payment was 21.6 trillion yuan, a year-on-year increase of 19.5%. From January to September this year, the cross-border payment amount of RMB was 38.9 trillion yuan, a year-on-year increase of 24.4%.

According to the latest data from SWIFT, the Chinese yuan accounted for 2.15% of the global market in December last year. However, by February of this year, the internationalization process of the yuan had suddenly accelerated, and by September of this year, its proportion had risen to 3.71%. Moreover, there are still a large number of transactions in the RMB that have not been processed through the SWIFT system, and this number is actually far underestimated.

So it is not difficult to see that as "de dollarization" gradually becomes a global consensus, the internationalization of the renminbi is also continuing to advance rapidly, including this time accounting for more than the euro in global trade financing, all of which are solid evidence of the acceleration of renminbi internationalization.

The ideal situation for the future global currency market is multipolarity, without the hegemony of the US dollar, and no one has absolute hegemony. Lying on the people of the world and sucking blood is undoubtedly moving the "lifeline" of the United States. The United States cannot give up and give up easily, and there will definitely be a good play to play in the future.

It is not surprising that the United States is using the hegemony of the US dollar to transfer its own debt and risks to the world, cutting off the leeks of countries around the world. The phenomenon of "de dollarization" is now occurring。

Although the process of de dollarization will inevitably be long and the internationalization of the renminbi will take time, the trend is good, and a diversified settlement system will inevitably become a new trend.