The
U.S dollar has enjoyed prevalence in international transactions as the world’s
primary reserve currency and has been the dominant currency for the last couple
of decades. Skeptics believe that time is ripe for the shift of dominance to
occur since the U.S dollar is no longer proving to be a ‘safe-haven currency,'
especially after the 2008 global financial meltdown. The financial crisis led
to the downfall of giant banks and financial companies with U.S witnessing the
largest bankruptcy in its history as a result of the downfall of Lehman
Brothers. The Euro or Chinese Yuan could very soon be the most dominant reserve
currency.
Critics
have often dubbed U.S dollar as “unhealthy for the global economy†and
“everybody’s problemâ€. Financial markets have been made the new battlefield in
the 21st century as currency wars ignite. China recently renounced the U.S
dollar by making swap agreements with 26 countries to boost trade between them
and even the European central bank. Some of the countries that have injected
billions that can change the Chinese yuan’s global status include; Canada,
Russia, Switzerland, Brazil, Argentina, Australia and New Zealand.
In
November 2015, the Chinese yuan officially became a world reserve currency.
Beginning October 2016, the yuan will account for 10.92% of the International
Monetary Fund (IMF) total reserve currency. This move will make the Chinese
yuan the fifth reserve currency after the Japanese yen, British pound sterling,
Euro and US dollar. Soon enough, the Chinese yuan will match the U.S dollar as
a primary trading currency since it’s currently the second most popular choice
in trade finance. According to Derek Han of North Square Blue, the dimensions
and strength of the Chinese economy are enough to make the RMB an alternative
to the U.S dollar.
On
the other hand, Euro’s metamorphosis into an economic superpower is still
thriving and might also lead to the diminishing of the dollar’s share in global
money supply. However, the ability of the Euro to counter the U.S dollar is
still questionable. The RMB remains more likely to be a counterpart and
alternative to the U.S dollar.
Sources
Additional articles
Education systems across the globe are centered on the notion that students attain and recall the information from books and teachers. Such systems often test the information with standardized tests that contrast students with one another. They so...Argumentative-Essay-on-Education-System …
Read ArticleIntroduction Food is the fundamental need and right of all the people. It is the obligation of a state to give the masses food and other fundamental needs. The world populace is anticipated to achieve 9 billion in 2050. Worldwide food unreliabi...Food-Security …
Read ArticleGenetically modified foods have been splashed in the news recently, with different people as well as public interests groups actively protesting in opposition to the GM foods for a long time. The latest controversial studies in relation to the con...Evaluation-essay-Benefits-of-Genetically-Modified-Foods …
Read Article