Key Takeaways:
- Former US President Donald Trump believes the Chinese yuan will replace the US Dollar as reserve currency
- Following his recent arrest and arraignment, Trump has doubled down his criticism of Biden
- The Yuan accounts for just 2% of global trade
YEREVAN (CoinChapter.com) — Former US President Donald Trump continues to relentlessly slam the Biden administration. In the latest post on Truth Social, a social media platform founded by his firm, Trump predicted that under Joe Biden’s watch, the Chinese Yuan will replace the US Dollar as the number one currency in the world.
Trump is still angry at his recent arrest and arraignment over 34 felony counts. Ever since he flew back to Florida from the court in Manhattan, he has been taking shots at his adversary Joe Biden.
According to him, the biggest defeat of the United States will probably happen under the current administration if Biden is not stopped.
“China is trying to displace the U.S. Dollar as the number one currency throughout the world… If this happens, and under Biden’s leadership it probably will, this would be the biggest defeat for our Country in its history,” Trump said.
Trump further alleged the USA would reduce to a “second tier status” under Biden. This, according to him was “unthinkable” just three years ago.
The allegation is almost a repeat of what Trump said while addressing his supporters from his private resort Mar-a-Lago, Florida, following his release on April 4, 2023.
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Can China depose the US Dollar as Donald Trump suggests?
Global reserve currency status is never permanent. While the United States dollar has dominated international trade, this was not always the case. In the 1400s, when Portugal dominated global maritime trade, the Portuguese Real was the king of the currencies. Its nearly century-long dominance ended in 1530 when rival Spain become more powerful and influential.
The following three centuries would see the currencies of other European powers gain global dominance. While the guilder of the Netherlands commanded during the 17th century, France deposed it in the 18th century to replace it with its livre.
As the British Empire grew stronger at the expense of its colonies, the British Pound established itself as the globe’s reserve currency until WWI. But then came the US Dollar.
It is safe to say that reserve currencies are not permanent. However, as history has shown, it does take a long time before someone comes to replace a dominant currency.
If the Chinese yuan ever replaces the US Dollar, it won’t be in the foreseeable future. Around 80% of global trade is conducted in US Dollars. In contrast, the Yuan accounts for just 2%.
Moreover, there is little global trust in the Chinese Government, which backs the currency. However, the shift has already begun.
US Dollar Dominance on the decline
Donald Trump is not entirely wrong. Several countries are dumping the dollar in their international trade. Russia announced recently that it will use the Yuan to trade with countries in Asia, Africa, and Latin America.
Last month, China completed its first liquid natural gas (LNG) trade in Yuan, in the 65,000 tonnes of LNG imported from the United Arab Emirates. Moreover, nearly 20 countries have now agreed to accept the Indian Ruppee in global transactions.
Recently, BRICS announced it is working to form its internal currency for trade. The organization comprises economic giants Brazil, Russia, India, China, and South Africa.
While the Dollar still dominates, its decline has already begun. The crippled banking system in the United States makes its fall just a matter of time.
Also Read: 5 reasons why the dollar is f*cked
