China's central bank is testing its digital currency in several major Chinese cities. The chairman of US Federal Reserve has recently confirmed that the US Central Bank is working on digital dollar. The State Bank of Pakistan announced in 2019 that it was developing a digital currency. It seems that the popularity of Bitcoin has triggered serious worries of loss of control of the official financial systems among the central bankers around the world. China's substantial lead in digital currency could put it far ahead of the US in the future of global payments and financial settlement. It could eventually displace the US dollar and provide China with the immense global financial power that the US currently enjoys.
![]() |
Digital Yuan |
Central Bank Digital Currency (CBDC):
What Is a Central Bank Digital Currency (CBDC)? Investopedia defines it as a digital currency that "uses a blockchain-based token to represent the digital form of a fiat currency of a particular nation (or region)". A CBDC is centralized; it is issued and regulated by the country's Central Bank. Unlike decentralized cryptocurrencies like Bitcoin, a CBDC would be centralized and regulated by a country's monetary authority.
Riaz Haq
Arnaud Bertrand
@RnaudBertrand
SCMP editorial: https://scmp.com/comment/opinion/article/3242880/dollar-still-king-...
"The increasingly close relationship between China and Saudi Arabia has taken another significant step forward. The central banks of both countries have agreed on their first currency swap...
In the longer term, it augurs a petroyuan future as the two countries are already the most important trading partners of each other.
In a global political economy long dominated by the petrodollar, this could be the beginning of a seismic shift."
https://x.com/RnaudBertrand/status/1728923824996139481?s=20
---------------------
The increasingly close relationship between China and Saudi Arabia has taken another significant step forward. The central banks of both countries have agreed on their first currency swap worth a maximum of 50 billion yuan (HK$55 billion) over the next three years.
In immediate terms, the pact will foster bilateral commerce denominated in both the yuan and the riyal. In the longer term, it augurs a petroyuan future as the two countries are already the most important trading partners of each other.
In a global political economy long dominated by the petrodollar, this could be the beginning of a seismic shift. It has been a very long time coming.
Almost a year ago, President Xi Jinping made a historic visit to Riyadh, followed by Hong Kong Chief Executive John Lee Ka-chiu in February. A flurry of deals followed.
The Shanghai Stock Exchange and its Saudi counterpart have started collaboration on cross-listings, including exchange-traded funds (ETFs), financial technology (fintech), environmental, social and governance (ESG) and data exchange.
China, Saudi Arabia central banks sign currency swap accord to foster trade
21 Nov 2023
The People’s Bank of China (PBOC) building in Beijing on Tuesday, April 18, 2023. Photo: Bloomberg
The Hong Kong Monetary Authority, the city’s de facto central bank, and the Saudi Central Bank have enhanced ties covering the latest technologies in regulatory supervision and monitoring, and in financial fields such as tokenisation and new payment systems.
However, the latest currency swap pact will be the most important. It means trade can be conducted in local currencies, instead of defaulting to the US dollar. This may be seen as a challenge to US dollar dominance. Perhaps in the longer term, it is. But there is a good economic reason.
The current US federal interest rate of 5-plus per cent has pushed the dollar to historical levels against most other currencies, making trade denominated in the dollar more expensive.
There are obvious advantages for two big trade partners like China and Saudi Arabia to be able to utilise a local-currency option, which will help relieve pressures from having to trade in a more expensive currency.
Global “de-dollarisation” may take a while yet, but the trend already reflects cracks in a global economy long used to US currency settlements.
The yuan may or may not pose a challenge to dollar hegemony, but its internationalisation continues apace – to the benefit of both the Chinese and global economies.
Nov 27, 2023
Riaz Haq
The era of US dollar dominance is 'finished,' says Wall Street veteran who just retired after 54 years
https://markets.businessinsider.com/news/currencies/dick-bove-banks...
"The dollar is finished as the world's reserve currency," Dick Bove, who retired as a financial analyst after 54 years this month, told The New York Times. Bove, 83, predicted that China's economy would surpass America's in size.
The dollar's reign as the world's reserve currency is nearly over, Dick Bove says.
The newly retired bank analyst blamed corporate offshoring and flagged the threat posed by China.
Bove highlighted the de-dollarization trend and said other analysts are too bought in to admit it.
The US dollar has been the lifeblood of global finance and trade since World War II — but one Wall Street veteran thinks the end of that era is nigh.
"The dollar is finished as the world's reserve currency," Dick Bove, who retired as a financial analyst after 54 years this month, told The New York Times.
Bove, 83, predicted that China's economy would surpass America's in size. He blamed the outsourcing of US manufacturing to other countries, arguing that trend has given other countries more control of international production, the global economy, and worldwide money flows.
He also suggested that cryptocurrencies such as bitcoin could help fill the void left by the dollar's shrinking influence.
Dollar-denominated assets make up nearly 60% of international reserves, per the International Monetary Fund. However, several countries are embracing "de-dollarization" — working to erode dollar dominance — especially after the US took advantage of Russia's reliance on the greenback to levy sanctions against it following its invasion of Ukraine in 2022.
Nations ranging from Brazil and Argentina to India and Bangladesh are exploring the use of backup currencies and assets, such as the Chinese yuan and bitcoin, for trade and payments.
Several governments have blasted the excessive influence of US monetary policy on other economies and currencies, the dollar's strength for pricing out poor countries from imports, and the diminishing need for a petrodollar now the US has achieved energy independence through domestic shale oil and green energy production.
Bove, who worked at 17 brokerages during his career, told the Times that analysts who aren't forecasting dollar doom are simply "monks praying to money" who are unwilling to bite the hand that feeds them: the traditional financial system.
Jan 31
Riaz Haq
Saudi Arabia privately hinted earlier this year it might sell some European debt holdings if the Group of Seven decided to seize almost $300 billion of Russia's frozen assets, people familiar with the matter said, according to Bloomberg.
https://www.middleeasteye.net/news/saudi-arabia-threatened-sell-eur...
Like other Gulf states, Saudi Arabia’s currency is pegged to the dollar and it sells its oil in greenbacks, boosting the dollar’s position as the world’s reserve currency.
In January 2023, Saudi Arabia said it was considering trading in currencies other than the US dollar after reports that it was in discussions with China about selling some crude in yuan.
It’s not clear how much European debt Saudi Arabia holds, but its central bank’s net foreign currency reserves stand at $445bn. Saudi Arabia holds $135.9bn in US treasuries, placing it 17th among investors in the US bonds.
US President Joe Biden’s pledge to make Saudi Arabia “a pariah” over the murder of Middle East Eye and Washington Post columnist Jamal Khashoggi crystallised fears that Washington could one day turn on its decades-old ally.
Biden has since pivoted and is leaning on Saudi Arabia to seal a normalisation deal with Israel and play a role in post-war governance of the Gaza Strip.
-------
Like other Gulf states, Saudi Arabia’s currency is pegged to the dollar and it sells its oil in greenbacks, boosting the dollar’s position as the world’s reserve currency.
In January 2023, Saudi Arabia said it was considering trading in currencies other than the US dollar after reports that it was in discussions with China about selling some crude in yuan.
It’s not clear how much European debt Saudi Arabia holds, but its central bank’s net foreign currency reserves stand at $445bn. Saudi Arabia holds $135.9bn in US treasuries, placing it 17th among investors in the US bonds.
US President Joe Biden’s pledge to make Saudi Arabia “a pariah” over the murder of Middle East Eye and Washington Post columnist Jamal Khashoggi crystallised fears that Washington could one day turn on its decades-old ally.
Biden has since pivoted and is leaning on Saudi Arabia to seal a normalisation deal with Israel and play a role in post-war governance of the Gaza Strip.
Saudi Arabia’s threat underscores concerns in wealthy Gulf states that the West could one day apply similar economic levers it is pulling against Russia to Gulf powers' overseas assets, if criticism of human rights issues in the Gulf or their foreign policy decisions resurfaces.
Russian President Vladimir Putin has courted Saudi Arabia, as he relies on the oil-rich kingdom to counter Moscow’s isolation on the world stage and shore up energy markets.
Putin made a rare visit to Saudi Arabia and the UAE in December.
Jul 9