On Thursday, on the sidelines of the St. Petersburg International Economic Forum (SPIEF 2023), Igor Shuvalov, head of Russian state development corporation VEB.RF said the Chinese yuan is gradually choking out the competitive advantage of the US dollar as it has attained the status of a global reserve currency.
Shuvalov pointed out that already nations around the world have made “significant” progress toward abandoning their dependence on the dollar and “this process will continue.”
Shuvalov stated, “Even those who are on good terms with the US, seeing the current economic and financial confrontation, will support the development of alternate settlement systems that do not rely on SWIFT and the dollar – for their own safety… It’s not a matter of trust or distrust, it’s a fact of life that must be overcome by creating new payment systems.”
He continued to point out that VEB.RF only makes its payments in international settlements with foreign trade partners using the yuan and other friendly countries, and never uses the dollar.
He stressed, “The yuan is now a global reserve currency, there is no hiding it.”
According to the International Monetary Fund (IMF), in the fourth quarter of 2022, the dollar’s percent share among international foreign currency reserves fell to an almost three-decade low of 58%.
As concerns have grown over soaring US debt and the United State’s proclivity to wield access to its currency as a cudgel in international geopolitical disputes, many nations have begun to move away from settling their cross-border trade obligations in dollars. Russia, which was a particular target of international trade sanctions has shifted nearly all of its energy trade to international currencies, in particular the ruble and yuan.
Meanwhile, the yuan has been growing in prominence on the global market. Almost entirely absent from global over-the-counter forex transactions 15 years ago, its share has now grown to 7% in 2023, according to data from the Bank for International Settlements (BIS).
As of March of 2023 the yuan surpassed the dollar among China’s cross-border transactions, as the nation’s trade partners have overwhelmingly sought to limit their own dependence on the dollar.
