The internationalization of Chinese currency is no longer a fantasy. The growth of international payments in Yuan is dazzling. Bitcoin in ambush.
In short
- China makes 50 % of its international payments in its own currency.
- The Chinese international payment system has an annual growth of 40 %.
- The world will soon need a new international reserve currency. Gold and bitcoin in ambush.
Dollar vs yuan
We have written little recently that China gets rid of American debt. This week, The Economist Title that China also abandons dollar payments.
The article is reminiscent of a speech delivered in June by the governor of the Chinese central bank. Pan Gongsheng said the global financial system became “multipolar” and that the dollar is now in competition with other currencies.
According to the Chinese central bank, more than 30 % of Chinese trade in goods and services are now made in Yuan. The figure even climbs to 50 % if we add financial flows. These financial flows include foreign investments in China, and vice versa (financing new silk roads).
“Multipolarity” is the favorite word of the BRICS Alliance recently reinforced by six new members (Iran, Egypt, United Arab Emirates, Saudi Arabia and Ethiopia). The waiting room is also well stocked. The club weighs for more than 30 % of world GDP. It is almost 50 % if we add the countries that jostle at the gate.
Their ambition is clearly to dedolize exchanges, a strategy that is already bearing fruit. The greenback only represents only 42 % of world exchange reserves (gold is increasing sharply).
In addition, as we said in the introduction, the share of the dollar in international payments is also on the decline.
Swift vs cips
Reports such as those of FXC Intelligence or Grand View Research estimate world cross -border payments at around 200,000 billion dollars per year (excluding derivatives, FX, etc.).
The Swift system still treats the bulk of these payments, but perhaps more for a long time. Systems such as CIPS (Yuan), Fedwire (Dollar), Target2 (Euro) and smaller networks (the Russian SPFS) are gaining ground.
The volumes of the Chinese International Payment System CIPS (Cross-Border International Payment System) have extraordinary growth. More than 175,000 billion yuan (24,470 billion dollars) in 2024, an increase of 43 % compared to 2023! And the current trend suggests a new increase of 35 to 45 % in 2025.
In all, more than 1,700 banks based in 119 countries have already connected to the network. In other words, China can easily trade with other countries without going through the Swift system and the dollar. Moscow and Beijing make, for example, more than 95 % of their exchanges in yuan and rubles, without going through the SWIFT system.
And even if it is true that 80 % of CIPS payments go through the SWIFT system, a complete abandonment is possible in the event of a total trade war.
In short, if the Yuan's share in international payments remains much lower than that of the dollar, things could be very different by a handful of years.
An evil for a good?
The dollar dropped approximately 11 % in the first half, ending a 15 -year -old bullish cycle. It has been the highest drop in 50 years. And despite a rebound during the summer, Morgan Stanley anticipates an additional 10 % fall by the end of next year.
“We are probably at the intermission rather than at the end”,, said David Adams, FX manager at Morgan Stanley. “The second act of the weakening of the dollar should occur over the next 12 months, as American interest rates and growth converge on those of the rest of the world. »»
Indeed, the markets expect the Fed to lower its key rate for the first time in a year this Thursday, which will have been weighing on the dollar.
It will be more expensive for Americans to travel abroad and imports will be more expensive, not to mention customs taxes. This will result in more inflation and/or less imports.
A drop in imports would be welcome. Donald Trump also hopes that the devaluation of the dollar will restart exports. It will be necessary since the rest of the world no longer wants to finance their gargantuan debt. Removing the trade deficit is now a national priority.
Which brings us to the subject that interests us: Bitcoin.
Bitcoin compromise
Why do the United States suddenly show benevolence towards Bitcoin? Is it not a direct threat to the status of international reserve currency of the dollar? Absolutely.
But let's not seek noon at fourteen o'clock. Washington simply realized that the famous “exorbitant privilege” of the dollar is no longer one.
What is this privilege? It's very simple. Exporting nations keep the international currency in reserve (the dollar). More specifically, they place these dollars in American public debt to garner interest.
This system (known as the petrodollar) allows the United States to display a chronic deficit in its trade balance without the dollar falling. For what ? Because money returns to the fold because the foreign central banks place their reserves in treasury bills.
Problem, China no longer wants to finance American debt, either Russia either. Many nations turn to gold, now a second reserve currency in front of the euro. The quarter of international reserves is now invested in gold.
Of course, it is unlikely that the Americans accept the yuan in payment … They will only accept to trade on equal arms.
Hence the interest in Bitcoin. Selling gold stocks to buy a stateless and existing reserve currency in absolutely finished quantity would weaken Russia and China that have been betting on gold for almost two decades.
Michael Saylor went this Tuesday on the side of the White House to advance the file of the Bitcoins Strategic Reserve. Your servant would be very surprised for the United States to ultimately abandon Bitcoin.
If everything goes as planned, we are at the dawn of the longest Bull Run in the history of Bitcoin. Don't miss our article: Bitcoin: towards new heights before the end of the year?
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