Global Payment: USD at 47.54%, HKD Surpasses AUD, SGD
Recently, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) released the global currency international payment share for December 2023. In the latest data, the US dollar continues to maintain its strong position, with a month-on-month increase in payment share, while the euro, as always, has declined. Why is this the case? In the competition for the fourth and fifth places, the renminbi has surpassed the Japanese yen for two consecutive months. As for our country's Hong Kong dollar, it has stepped on the Australian dollar and the Singapore dollar, and some people should shut up.
The status of the US dollar is unshakable.
The ranking of global currency payments demonstrates the hard power of a country's currency, and the proportion of the renminbi is also continuously increasing.
The US dollar, currently serving as the world's universal international currency, still occupies an unshakable position.
In December 2023, the international payment share of the US dollar reached 47.54%, an increase of 0.46% compared to the previous month, with a clear upward trend.
If we compare it year-on-year, we will find that the payment share of the US dollar in 2023 has increased by 5.65% compared to the same period last year.
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So the question arises,
Why, amidst the global trend of de-dollarization,Why has the proportion of payments in US dollars actually been steadily increasing?
The primary reason is likely the size of the cake, followed by the fact that de-dollarization is a slow process that cannot be achieved overnight. The United States took hundreds of years to accomplish this feat.
So even if de-dollarization accelerates, it will be measured in decades, not just a few short years.
Additionally, the data from the Global Telecommunications Association only publishes the proportion, not the specific payment amounts.
For example, last year, global payments in US dollars were 20 trillion, but this year, due to the rise of other currencies such as the renminbi, the figure has dropped to 18 trillion.
Some time ago, the trading volume of the renminbi on the Moscow Exchange surpassed that of the US dollar for the first time, and the trade volume between the renminbi and Russia does not go through SWIFT.
So the entire payment system's cake has shrunk, and even if the payment amount in US dollars remains unchanged, its proportion will increase.
We must clearly recognize that global de-dollarization is an irreversible trend.
This is because the United States' debt is unsustainable, and its decline is unstoppable, but this also requires a process.
For many years, Europe has essentially followed the United States, and the decline of the United States largely begins with the decline of Europe.From the payment share of the euro, we can see some clues.
The euro's self-weakening
Although the euro's share ranking is still second, its proportion has decreased significantly. Throughout 2023, the euro's payment share has been declining, with a drop of 0.54% just in December.
If compared to 2022, the decrease is as high as 14%, which is quite terrifying for the EU.
Why?
Because the EU's payment share already includes the transaction amounts of EU member states.
It's like the trade amounts between Chinese provinces, all counted as international payments in RMB, making the amount look very large and full of water.
Although several major European powers once hoped that the euro would break the monopoly of the US dollar, in reality, the economic strength of the eurozone is not enough to support it as the world's leading currency.
The outbreak of the European debt crisis and the Russia-Ukraine crisis also impacted the international status of the euro.Many investors have begun to doubt the stability of the euro, leading to a decline in its share of international payments.
The slide in the euro's share of international payments also reflects changes in the global economic landscape. With the rise of emerging market countries and the deepening internationalization of the renminbi, the global monetary system is gradually showing a trend towards diversification.
This means that, in addition to the US dollar and the euro, the status of other currencies in the international payment market is also gradually rising.
This change poses a challenge to the international status of the euro.
Despite the decline in the euro's share of international payments, its status as an international currency is still undeniable. The eurozone has a strong economic foundation and a large market size, which provides support for its currency's international status.
Although the European Central Bank is also actively taking measures to enhance the international competitiveness of the euro.
However, if the euro wants to return to the era when it could compete with the US dollar, it must adhere to an independent strategy. Now Europe has completely become a vassal of the United States.
In addition, the possibility of a large-scale war breaking out in the European region at any time makes it difficult for Europe's monetary autonomy to remain stable, which is also the reason why people continue to sell euros.
In sharp contrast to the euro is the rise in the share of renminbi and pound payments.The British pound, with a share of 6.92%, ranks after the US dollar and the euro, with an increased proportion, even in the face of a clear economic downturn:
Why has the UK been able to stand alone in Europe?
The reason is its successful Brexit, and the geopolitical risks on the European continent rarely spread to the British mainland.
The United States is more like a larger version of the UK, naturally encroaching on the euro's share.
However, the Chinese yuan is not inferior at all.
The Chinese yuan is steadily increasing
The payment share of the Chinese yuan is 4.14%, a decrease from 4.61% in November, but still the second-highest level in history.
Our Hong Kong dollar has also risen to the seventh position globally, far exceeding the Indian rupee, Australian dollar, Singapore dollar, and Korean won. So, looking at the status of the international financial center through this data, those who are bearish on Hong Kong should shut up.
If compared with 2.14% in 2021, it can be seen that in recent years, the payment amount of the Chinese yuan has more than doubled.
Not only that, the Chinese yuan has been suppressing the Japanese yen for two consecutive months, and the Chinese yuan has steadily moved from the fifth global payment position to the fourth.This achievement is quite remarkable.
Because this payment amount is the data after we exclude the Renminbi currency swap and CIPS payments.
For example, our trade volume with Russia has reached 1.7 trillion yuan, equivalent to 240 billion US dollars, which is not included in the SWIFT data at all.
If we add the Renminbi settlements with countries such as Saudi Arabia, Iran, and the United Arab Emirates, this number will be even larger.
Therefore, to some extent, the international payment share of the Renminbi has already jumped to the second place among global payment currencies, second only to the US dollar.
In addition to traditional international trade and capital flows, China is also committed to building a cross-border Renminbi payment system (CIPS) with independent intellectual property rights.
The construction of this system aims to create a "one-stop processing" system for Renminbi cross-border business with a unified interface and unified standards, thereby increasing the proportion of Renminbi in cross-border payments and accelerating the internationalization process of the Renminbi.
As of the end of January 2024, the CIPS system has a total of 1492 participants, including 139 direct participants and 1353 indirect participants.
Among the indirect participants, there are 1007 in Asia (564 domestic), 233 in Europe, 48 in Africa, 28 in North America, 20 in Oceania, and 17 in South America.
Participants in the CIPS system are distributed in 113 countries and regions worldwide, with actual business covering more than 4400 corporate banking institutions in 182 countries and regions around the world.This means that the business of the CIPS system has covered most regions of the world.
The goal of "where there is the RMB, there is CIPS service" has been preliminarily achieved.
The construction of the CIPS system has not only increased the proportion of the RMB in cross-border payments but also laid the foundation for reshaping the global financial landscape, laying a solid foundation for the future dominance of CIPS and SWIFT.
With the acceleration of the internationalization of the RMB, more and more countries and regions have begun to include the RMB in their foreign exchange reserves, and the international status and influence of the RMB have been further enhanced.
At the same time, with the continuous improvement and promotion of the CIPS system, the convenience and security of RMB cross-border payments have been effectively guaranteed, further promoting the internationalization process of the RMB.
In the future, with the continuous deepening of the internationalization of the RMB and the continuous improvement of the CIPS system, the RMB will play an increasingly important role in the global financial landscape.
This will also bring new opportunities and challenges to the development of China's economy. Faced with this trend, we need to firmly seize the opportunities, first vigorously promote RMB settlement in emerging countries, and strive to promote the process of RMB internationalization.
Based on this, we can gradually erode the currency payment share of the old Western countries and make contributions to the stability and development of the global economy and finance from the East.
At the same time, we oppose the dollar hegemony, step by step, establish the international payment circle of the RMB, and achieve the comprehensive rise of China!
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