The American bank JP Morgan believes that the Chinese currency could wrest the crown of hegemony in the financial markets from the dollar. In 2023, the currency of the Middle Kingdom has continued to gain importance. A situation that is good for BRICS, of which China is one of the most influential members.
JP Morgan supports BRICS dedollarization ambitions
While Iran is pushing the BRICS towards the monetary revolution, the American bank JP Morgan is providing some grist to the organization’s mill. According to its findings, the Chinese yuan has the potential to dethrone the US dollar.
The argument of the financial juggernaut is based on the recent dynamics of the Chinese currency. According to JP Morgan, this currency is emerging as a credible financial alternative to the currently dominant greenback, although the United States is saddled with debt.
For the banking group, the currency of China, a historic member of the BRICS, could replace the American dollar. In particular, if the greenback continues its downward trajectory in the international monetary system. Overall, this is the trend that has been observed for several months.
Paradoxically, this decline in the American currency is not primarily linked to the economic setbacks of Uncle Sam’s country. Analyzes show that it is the Chinese currency which, through its dynamism, is pushing the American currency towards depths.
The US dollar affected by BRICS?
For Alexander Wise, strategy researcher at JP Morgan, the only real competitor to the US dollar is currently China’s currency. The expert highlighted the role of the currency of this BRICS member in the potential decline of the dollar.
According to his explanation, this is the consequence of China’s central position in world trade. This acts as a natural driver of the growing importance of the renminbi (the yuan) in the global economy over time.
Alexander Wise believes that certain key factors could support the rise of the Chinese currency. He cites, among other things, the relaxation of capital controls, market liberalization, measures to improve market liquidity.
This is without forgetting the promotion of Chinese government bonds as safe alternative assets. All of this will obviously strengthen China’s financial power, but will also benefit the BRICS of which the country is a member. Remember that throughout 2023, the alliance strategically continued its plan to exit the dollar. A project which should see new developments throughout this new year.
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