Unnecessary dollars. The us currency pushed out of Asia

© REUTERS / Umit BektasПредприниматели wishing to exchange dollars for Lira at the currency exchange in Ankara, Turkey. 14 Aug 2018Unnecessary dollars. The us currency pushed out of Asia© REUTERS / Umit Bektas

Aggressive trade policies trump and an unprecedented amount of debt make the U.S. dollar less suitable for international payments. The inevitable de-dollarization of the world economy and say Bank analysts and economic theorists. As in the near future will change the global financial system and what will lose US — in the material RIA Novosti.

Double blow

The main reason of the upsurge of discussion of the prospects of the dollar as world reserve currency — China has inflicted on the positions of the American currency two powerful blows.

First, on the Shanghai international energy exchange opened trade oil futures denominated in yuan. Despite the skepticism of many analysts, in just six months, the share of RMB transactions reached ten percent.

In September, buyers will receive the first 600 thousand barrels of oil purchased for the yuan. Experts do not doubt that the interest of the traders to buy black gold for the Chinese currency will only intensify.

«This will be one of the most significant changes in the way uses the United States dollar on a global scale, says economic analyst Rory Hall at the Daily Coin. The first crude oil futures implemented without the use of the dollar, can greatly affect global trade. And the fact that the economic relations of China and Russia strengthened, makes the situation even more dangerous for the Federal reserve and the dollar’s status as reserve currency».

Hall emphasizes that, if the volume nefelinovyh futures will continue to grow as fast as it is now, the prospects for the dollar unenviable.

The second Chinese strike came as a surprise to most observers. Goldman Sachs analysts found that in recent months has accelerated dramatically the flow of foreign investments from U.S. government bonds in Chinese denominated in RMB.

And this trend will increase, because the PRC state Council decided to introduce tax incentives for buyers of government bonds.

According to Goldman Sachs, in the next five years, foreign investors will invest in Chinese securities over a trillion dollars and almost a third of this amount will take away from US government bonds.
Not only the celestial

An alternative to the us currency looking for almost all countries that fall under those or other sanctions of Washington. This week Iran and Iraq have removed the dollar from payments in bilateral trade.

«Go Iranian Rial, the Euro and the Iraqi Dinar», — said the Chairman of Iran-Iraq chamber of Commerce Yahya al-Eshaq.

Earlier, Tehran said it would sell oil to Europe for dollars and the Euro.

Turkish President Recep Tayyip Erdogan on Monday said that «linking international trade to the dollar becoming a serious problem,» and urged to abandon the us currency in the foreign trade calculations.

The same was said and the Minister of foreign Affairs of Russia Sergey Lavrov. «The United States for the sake of yourself stop the maintenance of Bank transactions in dollars, — he said on air of the First channel. — And the dollar becomes an instrument of pressure not only on the geopolitical opponents of the US, but allies.»

The Russian foreign Minister stressed that Americans have always considered their main currency, so use the dollar to manipulate unwanted countries.

«Gross abuse weaken the role of the dollar as an international currency,» warned Sergei Lavrov.

Earlier, the Minister of industry and trade Denis Manturov said in an interview with RIA Novosti that Russian automakers are moving to settlements with Turkey for the supply of components in national currencies — such information was announced by a number of companies.

The main obstacle of de-dollarization — currency instability. The devaluation of the currencies of developing countries, including Iran, Turkey, Russia, the dollar and the Euro over the last month is measured in double digits (percentage).

Therefore, without a radical change in the policy of national Central banks to talk about the complete rejection of the dollar is not necessary.

The extra dollars

According to experts, even a partial refusal of the us currency in international settlements threatens the US economy is a huge problem.

«Reducing the use of the dollar in world by 30-40% or even less may be prohibitive, warns Rory Hall. — The «extra» dollars back into the US economy and acceleration of inflation, discouraging investors.»

In the article on Project Syndicate the Nobel laureate in Economics Jeffrey Sachs explains that due to the current status of the national currency as a global reserve USA get three important economic benefits. First, the ability to borrow abroad in dollars.

«If the government borrows in foreign currency, there is a risk to fail, but if you borrow in your own currency, this threat is minimal, writes Sachs. — In General, the international role of the dollar allows the U.S. Treasury to raise funds in the market with more liquidity and lower interest rates.»

The second advantage is connected with the financial business: USA make the most money from the banking services the rest of the world. The third advantage concerns the regulation and control, directly or indirectly, USA today run the most important systems of cash payments in the world.

«Bad government trump brings an end to the era of the dominance of the dollar — says Nobel laureate. — Other countries, led by China and the EU will now actively seek ways to evade U.S. sanctions, primarily in an effort to circumvent the dollar payment system».

In the end, the White house would lose all the above benefits and will be one on one with a giant national debt and budget deficit.

«While business leaders support trump, who pleased with their lower corporate taxes and deregulation. But after a few years of his irresponsible foreign trade and sanctions decisions will drastically weaken the country’s economy and the role of the dollar in world Finance,» writes Sachs.