Milestone: Chinese Yuan Surpasses Euro as Leading Currency in Global Trade Transactions in 2023

[Beijingwalker]

Milestone: Chinese Yuan Surpasses Euro as Leading Currency in Global Trade Transactions in 2023​

2023.12.12 14:26

Euros are one of the world's major currencies.

Among the currencies used in global trade this year, the Chinese yuan has emerged as the second most widely used currency after the U.S. dollar, reflecting its substantial presence. The assessment suggests that the yuan is rapidly gaining momentum as a potential key currency in the future.

During the 9th Anniversary Conference of Seoul’s Won-Yuan Direct Trading Market hosted by the International Financial Center (IFC) and the Bank of Communications (BOC) of China on Dec. 11, Lee Chi-hoon, a research fellow at the IFC, said, “This year, global yuan settlements and trade finance have recorded the highest levels in history.”

In fact, the yuan has seen a sharp increase of 21.5% in payment usage this year, driven by strengthened cooperation between China and the Middle East. In terms of trade finance ratio, the yuan surpassed the euro for the first time in September, securing the second position.

Lee anticipated that the gross domestic product of China would surpass that of the United States by 2037. This outlook is based on the growth supported by Chinese consumption, the service sector, and investments in advanced industries. However, it is speculated that the yuan will coexist with the U.S. dollar in the long term rather than immediately surpassing the U.S. dollar and becoming the key currency.

Lee stated, “It is not an unrealistic prediction that the yuan could become the key currency, and it is possible. However, there are still too many shortcomings when considering stable exchange rates or criteria as a settlement currency for the yuan to become the key currency.”

Professor Ku Ki-bo of global commerce at Soongsil University said, “The yuan surpassing the euro is the first step before surpassing the U.S. dollar. When considering the growth rate, there is no doubt that the yuan is progressing rapidly.”

It has been pointed out that the accessibility of the yuan for market participants remains low while the status of the yuan is rising. Baek Bong-hyun, a deputy head of the international general management team at the Bank of Korea, said, “The demand for the yuan by companies is still significant, but accessibility is constrained. Given the dual exchange rate system of the won-yuan, which tends to fluctuate rapidly, market participants such as foreign exchange dealers are less actively engaged.”

Yuan Surpasses Euro as Leading Currency in Global Trade Transactions

Among the currencies used in global trade this year, the Chinese yuan has emerged as the second most widely used currency after the U.S. dollar, reflecting its

www.businesskorea.co.kr

 

[Beijingwalker]

HISTORIC: The Chinese Yuan outpaces Euro in international financial transactions!

To view this content we will need your consent to set third party cookies.
For more detailed information, see our cookies page.

Accept third party cookies

 

[VCheng]

Among the currencies used in global trade this year, the Chinese yuan has emerged as the second most widely used currency after the U.S. dollar, reflecting its substantial presence. The assessment suggests that the yuan is rapidly gaining momentum as a potential key currency in the future.

Now this is definitely a great achievement that speaks well about China's economic progress. Well done!

Lee anticipated that the gross domestic product of China would surpass that of the United States by 2037.

Oh so now it is 2037? That it keeps slipping further away is some more economic breathing room for USA. After all, it has to keep working hard to develop its own economy too.

 

[Beijingwalker]

Oh so now it is 2037? That it keeps slipping further away is some more economic breathing room for USA. After all, it has to keep working hard to develop its own economy too.

US dollar based nominal GDP no longer matters, US GDP is based on inflation and money printing, the standard of living is actually declining. China just needs to focus on concrete results , not much manipulated dollar GDP.

 

[VCheng]

US dollar based nominal GDP no longer matters, US GDP is based on inflation and money printing, the standard of living is actually declining. China just needs to focus on concrete results , not much manipulated dollar GDP.

What is the relative volume of financial transactions conducted in USD and Yuan currently? Do you think it is relevant in the present topic and when do you think Yuan will surpass the USD in this measure? Or that does not matter either?

 

[Beijingwalker]

What is the relative volume of financial transactions conducted in USD and Yuan currently? Do you think it is relevant in the present topic and when do you think Yuan will surpass the USD in this measure? Or that does not matter either?

US GDP breakdown, A big bubble

Service-based industries, including professional and business services, real estate, finance, and health care, make up the bulk (70%) of U.S. GDP. In comparison, goods-producing industries like agriculture, manufacturing, mining, and construction play a smaller role.

Professional and business services is the largest industry with $3.5 trillion in value added. It comprises establishments providing legal, consulting, design, administration, and other services. This is followed by real estate at $3.3 trillion, which has consistently been an integral part of the economy.



China's GDP breakdown

 

[VCheng]

US GDP breakdown, A big bubble

But that is not my question.

 

[Beijingwalker]

US GDP has been massively bloated by hyper inflation and much of the GDP goes to the pockets of lawyers and financial consultants.

But that is not my question.

I think it depends on how much longer US can be able to keep that high interest rate, it's a slow suicide

Brace for constant volatility as high interest rates amplify the US debt problem, BlackRock says

The US could spend more paying the interest on its debt than it does on Medicare payments in just a few years, BlackRock said.

finance.yahoo.com

https://www.reuters.com/world/us/us-budget-deficit-hits-record-high-november-interest-costs-2023-12-12/

 

[VCheng]

I think it depends on how much longer US can be able to keep that high interest rate, it's a slow suicide

But that is not I asked either.

Currently, what percentage of global financial transactions are in the two leading currencies (US, Yuan) and what is the time estimate for the Yuan to overtake the USD at present rates of its rise?

THAT is the question.

 

[Beijingwalker]

But that is not I asked either.

Currently, what percentage of global financial transactions are in the two leading currencies (US, Yuan) and what is the time estimate for the Yuan to overtake the USD at present rates of its rise?

THAT is the question.

Not in the foreseeable future, US has an edge of long established global dollar domination, it's not easy to topple it overnight unless US did something extremely stupid. but digital currency could be a strong potential candidate to replace dollar, we'll see.

 

[VCheng]

Not in the foreseeable future, US has an edge of long established global dollar domination, it's not easy to topple it overnight unless US did something extremely stupid. but digital currency could be a strong potential candidate to replace dollar, we'll see.

Thank you for the answer. Yes, we will see. Both countries will continue to try their respective bests.