RMB Surpasses Euro as 2nd Global Currency: How Long Until Dollar Dominance Ends?

Despite facing external misunderstandings and challenges, the status of the Renminbi (RMB) as an international currency continues to rise steadily.

The "Renminbi Internationalization White Paper" released by the Bank of China reveals the continuous strengthening of the RMB's role in the global currency system.

Surveys indicate that 58.2% of domestic business respondents and 47.0% of foreign business respondents plan to increase the use of RMB for settlement, with a significant increase in this proportion compared to last year.

The latest data reveal the RMB's significant progress in the global payment market.

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In July 2024, the international payment value share of the RMB rose from 4.61% in June to 4.74%, maintaining above 4% for nine consecutive months, and setting a new historical record, solidifying its position as the world's fourth-largest payment currency.

Additionally, in the trade finance sector, the RMB's market share reached 6%, successfully surpassing the Euro's 5.83%, following closely behind the US Dollar.

The internationalization journey of the RMB is not without obstacles.

Some media's negative portrayal and suppression of the RMB, as well as misunderstandings about currency swap agreements, have adversely affected the international reputation of the RMB.

Nevertheless, authoritative data releases provide us with the truth and lay a solid foundation for the future development of the RMB.

The latest trend analysis and data reveal a steady increase in the RMB's share in the global payment market, reaching a record high of 4.74% in July, establishing its position as the world's fourth-largest payment currency.

This achievement not only signifies a significant enhancement of China's influence in the global monetary system but also reflects a firm step in challenging the US Dollar's hegemony.

According to Swift data, the total amount of RMB payments has recently achieved a substantial increase of 13.37%, significantly surpassing the average growth rate of 10.29% for all currency payments.

This remarkable growth is mainly attributed to China's bilateral local currency swap agreements with multiple countries and regions, which effectively promote the growth of cross-border trade and investment and enhance the convenience of economic and trade cooperation.

The 2024 "Renminbi Internationalization White Paper" released by the Bank of China shows that the international currency functions of the RMB continue to improve, making positive progress in settlement use, financing and investment use, and pricing use.

The main international political risks in the process of RMB internationalization are manifested in the external pressures and misunderstandings that may be encountered.

For example, the United States' attention to the RMB exchange rate issue and the setting of exchange rate clauses in trade agreements could impact the internationalization of the RMB.

The US once labeled China as a "currency manipulator," although this tag was later removed, the entire incident highlighted the profound impact of international political factors on the process of currency internationalization.

The new role and opportunities of the RMB in international trade are gradually emerging.

Especially in countries involved in the "Belt and Road" initiative, the use of the RMB as a settlement currency is rapidly increasing, which not only promotes economic cooperation within the region but also consolidates the international status of the RMB.

The global trend of de-dollarization is accelerating, and the internationalization of the RMB is a key force in this process.

China's continuous promotion of high-quality economic development not only provides a solid economic foundation for the internationalization of the RMB but also provides a stabilizing force for the global economy.

As China further opens up its financial market and advances institutional construction, the frequency and convenience of using the RMB in international trade and financial activities continue to increase.

The United States' potential reactions to the internationalization of the RMB, including influencing through monetary and trade policies, have profound implications for the global political landscape.

The US's aggressive interest rate hike policy has exposed the inherent flaws in the current international monetary system, providing new opportunities for the RMB.

At the same time, the US's "de-RMBization" measures, such as advocating for currency liquidity swap agreements that exclude the RMB, pose challenges to the global promotion of the RMB.

Despite significant progress, for the RMB to occupy a more important position in the global monetary system, it still needs to face tests in various aspects, including the degree of financial market openness, the convertibility of capital accounts, and international investors' confidence in RMB assets.

China needs to continue to promote financial reforms, improve market transparency, and build a more open and competitive financial market environment.

China is actively defending the process of RMB internationalization through diplomatic and economic strategies.

China is solidly advancing high-level opening up, enhancing the use of the RMB in international trade and investment by signing currency swap agreements and promoting the "Belt and Road" initiative.

In addition, China is also accelerating the opening of financial markets and improving the cross-border RMB payment and settlement system to elevate the international status of the RMB.