China is undermining the dollar’s global role

To read the other side of this argument, see Digital RMB is no threat to dollar dominance.

China is taking small steps to undermine the global role of the dollar. The goal is to replace the dollar with Chinese technology solutions to match China’s increasing financial clout. Recently there have been major developments.

The first is using the renmimbi central bank digital currency for cross-border payments with a number of central banks. The second is creating an attractive alternative to the International Monetary Fund’s lending facilities in Asia. And the third is the partnership between the People’s Bank of China and SWIFT to operate financial messaging.

Replacing the outdated cross-border payments system, still based on transfers through correspondent accounts, has been declared a G20 priority. Many organisations, including the Bank of International Settlements through its…