American expert highlights 3 scenarios that push to reduce the role of the dollar as a reserve currency

Colin Weiss, an economist at the Department of International Finance of the US Federal Reserve, identified 3 scenarios in which the role of the US dollar as a reserve currency will decrease.

Weiss pointed out that geopolitical factors influence the situation with world currencies, since countries store reserves in them, based, in particular, on guarantees of the exporting country’s security or expressing support for its political goals and values.

The expert based his study of possible scenarios on an expected 0.5 percent decline in US official reserves in favor of the Chinese yuan, with a 1 percent decline in the use of that currency in export trade accounts. dot.

He added that there is a high probability of a reduction in dollar reserves in 43 countries in Africa, Central Asia, Latin America and the Middle East, since these countries are not in a formal military alliance with the United States, moreover, if they have relations with Washington in the field of defense, they cooperate in parallel with Beijing and Moscow.

As another scenario for the decline in the role of the dollar, Weiss considers China’s possible refusal to use the US currency as a reserve, a third scenario that would increase China’s influence and that could push Hong Kong, who feels threatened by Western sanctions, to abandon the peg. of its currency to the dollar and convert some of its exports to the yuan.

Source: linta. Ro