To import yuan: why does China help and its strategy to gain weight in the IMF

in this news

  • push for de-dollarization
  • Geopolitics and Multipole

Reasons behind the innovation of trading with the yuan, which in a major scenario falls in Argentina dollar shortage that affects the Central Bank and tough negotiations for the payment of external debt, Various experts point out The republic’s interest, led by Xi Jinping, to place the yuan among the basket of currencies of the International Monetary Fund (IMF).

A path that seems far away, because today the podium takes it Dollar with over 80% international operationsthen she euro, yen and pound but feasible in a scenario Decline of hegemony.

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In a document analyzing trade relations with China, the Chamber of Commerce of Exporters of Argentina (CERA) pointed out that the improvement in commercial relations takes place in the context of China’s changing role “lender of last resort” In Global Financial Architecture.

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a report of world Bank calculates it China has provided $240 billion in bailout loans to over 20 countries between 2000 and 2021 of which US$185 billion was disbursed between 2016-2021.

Although China’s role in the international financial system is “excessive” less central compared to established global lenders of last resort,” such as the International Monetary Fund (IMF) or irrigated of the US, the report warned that in general “China’s loans are more opaque.”

According to the international organization, “they have high interest ratesTargeted almost exclusively at low- and middle-income Belt and Road countries With significant loans to Chinese banks,

push for de-dollarization

Although “dollarization” was installed on the political agenda on the eve of the election, with some supporters and a wide range of opponents, Argentina is today Closer to the process of de-dollarization of international trade promoted by ChinaBy encouraging exchange into yuan.

“However since end of world war II The dollar has been the hegemony currency around the world, as this leading role of the world economy practically unique means of commercial exchange and store of value of nationshas come Declining more and more”, imposed Fabien Lugarini, Economic analyst.

In this sense he indicated In 1977, 85% of reserves in central banks were dollars.But currently represents 58%, “It is a process that got worse with the war in Ukraine and the sanctions imposed on Russia which had to do without this currency,” he said.

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Despite the G7 decision, many countries still need Russian goods such as hydrocarbons, food, fertilizers and military equipmentTherefore, Bilateral Agreements in Local Currencies,

That train is also jammed with banned people like Iran, Venezuela, Cuba, North Korea, Afghanistan besides Chinaone of the main actors with the initiative of de-dollarizationAs it is the second largest economy in the world and has a prominent place in global trade.

according to data from International Monetary FundChina is the largest trading partner of 61 countries, while America has such a relationship with only 30,

Among them the Asian giant is the main buyer of oil Saudi Arab (25%) and have already decided A significant portion of that trade will be denominated in yuan, Lugarini records and highlights position for through the initiative of Bandage And this new silk road Which includes 149 countries.

in that line too India entered into an exchange agreement with 18 pass As Germany, UK, Malaysia, Israel, To trade in Rs.

even Brazil He In 2022 it reached $150,000 million exchange with ChinaThere is an agreement not to use the dollar in imports and exports.

Geopolitics and Multipole

at the last summit of the members of Shanghai Cooperation Organization (Founded in 2001 and composed of China, Russia, India, Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan, Iran and Uzbekistan) Proposed by President Xi Jinping remove the lack of development Through regional integration.

wants initiative expansion of trade in local currenciesdevice of alternate payment system for foreign trade operations, as well as foundation of a development bank of the organization,

The initiative ties in with China’s efforts to “expand the use of its currency regionally”. infrastructure investment and foreign trade through local financial institutions and the Shanghai Cooperation Organisation,” Lugarini described.

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“Actually,” he said, “so can I reduce dependence on the dollarMitigate exchange risk and hedge against low liquidity of the US currency, while maintaining access to global markets in periods of geopolitical crisis”.

According to an expert on Latin American industrial sectors, all these changes point to world moving from unipolar to multipolar systemmeaning that “The dollar is losing its value as a unique instrument of international trade and global store of value. in favor of a basket of local currencies to be used in regional exchange”.

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