In a recent interview with Prime news agency, the head of analytical research at the Higher School of Financial Management, Mikhail Kogan, said that the dollar is appearing less and less in trade activities between countries. family. Instead, they use the local currency for commercial transactions.
"The emergence and popularity of the euro and the renminbi are strengthening, becoming the second and third currencies among international reserve vehicles," the expert said.
This will become the factors that have a strong impact on the dominant position of the dollar, "- expert Kogan said.
In the past, the US currency had almost no competition, but the situation has changed. According to this financial researcher’s forecast, the Eurozone (euro area) and China can knock the USD from the top position in the list of circulating currencies in the next 50 years.
Over the next decade, it is likely that the yuan will become the world’s most important currency - many countries see it as a worthy alternative to the US currency, Mr. Kogan said.
Over the past 10 years, global payments in US currencies have fallen from 50% to 43%. Its share in world reserve vehicles has also fallen from 70% to less than 60%. According to SWIFT, in October 2020, for the first time in many years, the euro surpassed the dollar in remittance transactions served by this system. With this result the European authorities have achieved their stated goals many times to strengthen the position of the European currency.
Russia is said to be the leading country in reducing the use of the dollar. The coin was removed from the list of national reserves in early July.
According to the announcement of the Russian Ministry of Finance, the USD was excluded from the structure of the National Wealth Fund, the share of the British pound fell to 5.0%, the share of the euro and the Chinese yuan increased. 39.7% and 30.4% respectively, the weight of the Japanese Yen is 4.7% and the weight of non-cash gold is 20.2%.
Observers note that, while other countries reduce their dependence on the US dollar to be more proactive in the face of threats of US economic sanctions, other currencies themselves are also showing appeal.
In March 2021, eurozone leaders said that promoting international use of the euro would help achieve "strategic autonomy".
According to the British newspaper The Economist, Europe is taking an important step in establishing a euro presence beyond its borders, when on June 15 the Union issued bonds worth $20 billion as part of the EU’s Next Generation (NGEU) plan to boost European economies.
This type of bond can compete with US Treasuries as a safe asset option.
These bonds are effectively backed by the balance sheets of all EU member states, thus making them roughly similar to US Treasury bonds. This is a relatively new thing in Europe, where borrowing is mainly done by governments, countries with different credit ratings.
The new European Union bonds create a way for investors to save in euros without incurring credit risk, such as if lending to Italy.
Morgan Stanley’s Reza Moghadam said the introduction of the NGEU "contributes to making the euro a better alternative to the dollar".
Meanwhile, at the beginning of July, the International Monetary Fund (IMF) has just released data on the monetary structure of official foreign exchange reserves (COFER). Accordingly, the renminbi’s share of global foreign exchange reserves has increased from 2.2% in the previous three months to 2.45% in the first quarter of 2021.
The data shows that the total foreign currency reserves of the renminbi (CNY) have increased from $269.49 billion in the fourth quarter of 2020 to $287.46 billion in the first quarter of 2021, achieving a nine-quarter growth rate next. The IMF began tracking the renminbi’s global reserve ratio in 2017.
IMF data also shows that the greenback is still the most widely held currency by global central banks, up to 59.54%, followed by the Euro 20.57% and the Yen 5. 89%.
