Across the spectrum of recent public discussion about de-dollarisation, commentators have tended to focus on negative factors and ramifications.
American monetary profligacy, fiscal incoherence and the weaponisation of the dollar, are driving other countries to settle bilateral trade in their own currencies and encouraging central bank reserve allocations to gold.
Counterarguments against the greenback’s demise tend to focus on its entrenched status and the absence of credible alternatives. China’s lack of a fully open capital account, unwillingness to run persistent trade deficits and a one-party political structure all mean that the renminbi can never challenge the dollar’s global leadership.
These arguments, however, neglect the growing attractiveness of the Chinese currency both as a store of value and as a vehicle for international trade and investment. Significant developments in China’s financial markets are changing the game board.
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* First published in The South China Morning Post (4 May 2023)
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