It is one thing when China’s new internationalization becomes a part of the emerging market economies, but it is something very different when it begins to make headway into long-standing dollar strongholds such as Europe and Japan. And with China’s new found recognition as a global reserve currency in the IMF’s SDR basket, and the creation just a few months ago of an alternative SWIFT (CIPS) system, that is exactly what is now happening as Yuan use in trade with Japan has doubled in just the past year alone.
Japan has been entrenched with the dollar ever since the end of World War II, as has most of the world because of Bretton Woods, and the polar reserve currency system. But as China took over the reins as the number one producer in the entire global economy, the desire to end use of the dollar as a middleman has led more and more nations to seek the ability to have direct bi-lateral trade with the Yuan currency, and 2015 has been the year of this breakthrough.
The Chinese yuan has been increasingly used in cross-border payments between China and Japan, underscoring the currency’s growing acceptance in cross-border transactions, according to SWIFT.
The Chinese currency’s share in all payments between Japan and Chinese mainland and Hong Kong doubled from a year ago to 7 percent in October, making yuan the second most active currency in cross-border payment between the two countries, SWIFT said in its monthly report tracking cross-border yuan payment.
The month has also seen China launching the much anticipated cross-border payment infrastructure Cross-border Interbank Payment System (CIPS), which can clear cross-border yuan payment more efficiently and potentially promote its use globally. – China Daily
Japan is not the only country obviously to have increased their acceptance of the Yuan as global use of the dollar decreases in international trade, but it represents a signal that dollar hegemony is quickly coming to an end, and that the critical mass that China is seeking for global use of their currency is happening at lightening speed, and in long-standing strongholds of U.S. domination.
It is expected very soon that Saudi Arabia and perhaps even all of OPEC will open up their oil sales to both the dollar and the Yuan, and this will mark the final end to the petro-dollar as nations could then purchase energy without having to pay swap fees to the U.S. for use of their currency in trade. And once this happens the last remaining dominoes may finally fall, and the rise of the next global monetary system will emerge from the works that China has accomplished in less than a decade.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.