Quote (bogie160 @ Feb 22 2022 08:00am)
Way too pessimistic. The Chinese are a decade behind on key tech. Their vaccine is the intellectual brainchild of a single man educated in the West who worked on MRNA tech.
The Chinese have roughly $2 trillion USD. It's not insignificant, but not too significant either. Chinese attempts to bypass American and EU payment methods have so far failed to find much traction beyond Chinese borders. Look at the total dollar amount and the footprint is tiny.
It's not about how much treasuries they hold, it's about them choosing to reject the dollar as the de-facto international currency. As China grows stronger and more advanced instead of going to Africa or South America and paying them in USD they could use the Yuan. Right now they may not be at the point where many countries would accept that but when they make that transition the dollar is fucked.
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However, Scott Kennedy, senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies (CSIS), told Newsweek that the rise of digital currencies could eventually allow China to largely do away with the dollar as an intermediary currency when conducting deals with its allies.
If digital currencies do in fact make it easier to conduct trade without the use of the dollar as an intermediary currency, China could find itself with a greater level of financial autonomy when making deals with its allies which could also allow it to avoid American punishment when conducting business that runs in contrast to American interests.
Kennedy said China could use its digital currency to avoid conducting financial transactions through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) which could allow it to avoid U.S. sanctions.
SWIFT is a secure communications system that allows banks to electronically send money overseas when conducting trade. Though the bank is independent of the United States, it is primarily overseen by the Group of 10 that includes Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom and the U.S. Because the interests of these nations are often aligned, SWIFT has in the past followed American demands, such as when it expelled Iran's central bank in 2012.
Kennedy said that China's digital currency could allow it to conduct trade outside of SWIFT, allowing it to escape any potential future U.S. sanctions.
"(China) wouldn't need that SWIFT interbank communication system. It is the only way for the U.S. to actually stop any of these transactions," Kennedy said. "There are a lot of different types of economic and political power that can flow from having the world use your currency."
https://www.newsweek.com/china-could-curb-reliance-us-dollar-avoid-sanctions-through-digital-currency-apps-1666116Also as a side note about Russia, the fact the US wasn't able to kick Russia off Swift is indicative that tbh the Euros are really not that ready to get serious about escalating with Russia. That's what would cause serious damage to Russia's economy, much of these sanctions are show only. I would say the pipeline, and possibly sanctioning some of the banks are impactful, the other stuff is fluff.
This post was edited by ofthevoid on Feb 22 2022 05:44pm