China Has Been Trying for a While to Make the Yuan a Global Currency

China Has Been Trying for a While to Make the Yuan a Global Currency

Presented by:

Dr. David K. Ewen

Did you know that the Chinese economy holds the coveted position of being the second-largest in the world? While this is an impressive feat, its currency, the yuan, has yet to reach the coveted status of a major global currency. However, recent geopolitical developments, particularly the war in Ukraine, could change this narrative.

China has long been working towards establishing the yuan as a global currency, and it has implemented various measures to facilitate this goal. The most notable of these initiatives include the launch of the Cross-Border Interbank Payments System (CIPS) and the introduction of yuan-denominated crude oil futures contracts.

Despite these efforts, the trading volume of the yuan still remains less than a tenth of the U.S. dollar, and it is involved in only a small fraction of global payments. Nevertheless, the conflict in Ukraine has led several countries to reconsider their reliance on the U.S. dollar and explore alternative currencies. The yuan has emerged as one such alternative and is gradually gaining popularity among these nations.

Take Russia, for example, which has begun accepting payments in yuan for coal and gas, while simultaneously increasing its holdings of yuan in foreign currency reserves. Similarly, Bangladesh has opted to pay Russia in yuan for the construction of a nuclear power station, and France is now accepting yuan as payment for liquefied natural gas acquired from China's state-owned oil company.

The war in Ukraine has inadvertently accelerated the yuan's ascent as countries seek more diverse currency options to mitigate the risks associated with relying solely on the U.S. dollar. This realization has prompted certain nations to actively reduce their dependence on the dollar, prompting them to explore alternative currencies such as the yuan.

China, recognizing this opportunity, has been actively implementing measures to internationalize the yuan. By promoting the use of the CIPS system and introducing yuan-denominated commodities futures contracts, China is facilitating the yuan's integration into the global financial system. The war in Ukraine has inadvertently contributed to the yuan's rise as a global currency, offering China a potential window to further its ambitions.

So basically, the war in Ukraine has inadvertently given the yuan a significant boost towards becoming a major global currency. Concerns over the dominance of the U.S. dollar, coupled with China's persistent efforts to promote the yuan's internationalization, have created an environment where alternative currencies like the yuan are gaining traction. The yuan is progressively moving closer to its aspirations of becoming a major global currency, thanks to recent geopolitical developments.

Presented by: Dr. David K Ewen

Comments

Ambassador Professor

Introduction Have you ever heard of the fascinating profession of an Ambassador Professor? It's a unique role where one person takes on the responsibilities of both a diplomatic ambassador and a university professor. In this capacity, they represent their country as an official envoy while also engaging in academic and educational pursuits. Imagine being able to balance the demands of international diplomacy and the world of academia simultaneously. That's the life of an Ambassador Professor! People Don't Know The value of Ambassador Professors may not be evident to everyone due to several factors that hinder their recognition: 1. Lack of Awareness: Not everyone knows what an Ambassador Professor does. The combination of diplomatic duties with academia is not common knowledge outside these circles. As a result, people may not grasp the importance of this role. 2. Limited Visibility: Ambassador Professors work behind the scenes, often unnoticed by the public eye. Their contr...

Courage and Determination - A Chapel in the Making at Enterprise College

RE : Courage and Determination A Chapel in the Making at Enterprise College To Whom It May Concern & to our Global Partners Life in international communities and global business is full of unexpected twists and turns, and sometimes we are presented with unexpected challenges that we did not anticipate or desire. However, it is important to remember that these challenges can also present opportunities for growth and development. Enterprise College has announced a Christian-based initiative to support an international effort to provide Asian and Middle Eastern communities with a Christian faith-based experience. This announcement comes in response to recent events that occurred on Friday, March 24, 2023, which have highlighted the need for greater support and understanding of different religious and cultural traditions . The initiative aims to promote greater understanding and acceptance of Christianity, particularly within communities where it may not be widely pra...

Impact of Illegal Border Crossings from Mexico to the United States

Impact of Illegal Border Crossings from Mexico to the United States The issue of illegal border crossings from Mexico to the United States is an issue that has been heavily debated in recent times. This essay will explore the economic, social and political impact of illegal border crossings from Mexico to the United States. It will analyze the implications of this phenomenon and explore how it has shaped the United States in the past and how it will shape it in the future. According to PM Orrenius’s research in the Economic and Financial Review-Federal Reserve (2001), illegal border crossings from Mexico to the United States has had a profound economic impact on both countries. In the US, illegal immigrants are typically concentrated in lower-wage occupations, and are less likely to be unionized than native-born workers. This has resulted in a decrease in wages for some American workers, particularly those in the same industries as undocumented workers. On the other hand, the influx of...

Enterprise College

Search This Blog