According to Argentine media reports, Argentina and Brazil jointly stated that the unified currency between the countries of the Southern Common Market has taken the first step. Although this will be a relatively long process, relevant research has begun. The Southern Common Market is composed of Argentina, Brazil, Paraguay and Uruguay. It is one of the world's largest developing country regional economies and the world's first common market consisting entirely of developing countries. According to analysis, the monetary unity policy of the Southern Common Market may affect the hegemonic status of the US dollar.
- South Korea or the four countries join hands with the EU to challenge the hegemony of the dollar
The MERCOSUR countries have always hoped to turn the region into an EU-like integrated region. The currency consolidation will be set up by Argentina, Brazil, Paraguay and Uruguay to set up a special group to assess the possibility of a unified currency in the next four countries. The EU is currently the only currency union in the world. There are currently 28 member states of the European Union, 19 of which form a monetary union. However, the euro has been enacted in 1969 and has been officially issued in 1999 for 30 years. Therefore, the currency unity of the Southern Common Market is estimated to have a long process.
The biggest good news for the Southern Common Market today is the free trade agreement with the European Union. On June 28 this year, the EU and the Southern Common Market ended 20 years of negotiations, reached a free trade agreement, and promised to further open the market to each other. The agreement will cover 800 million people, with a GDP of 19 trillion euros, accounting for four points in the world economy. one. The conclusion of the FTA has not only improved the economic and trade relations between the two sides, but the MERCOSUR countries can also take this opportunity to ask the EU about the issue of currency unification. More importantly, the Southern Common Market will or will challenge the US dollar hegemony with the EU.
According to outside analysis, the Southern Common Market and the EU economy have complementary roles, while the United States has direct competition with Argentina, Brazil, Paraguay and Uruguay in the agricultural and livestock market, so the currency of the Southern Common Market will affect the US dollar together with the Euro. status. But the blessings of the blessings are not alone, and the bad news facing the dollar is more than this one.
- The hegemonic position of the US dollar has been weakened by Russia and will become an opportunity for the rise of the renminbi.
According to the Global Times, Russia and the European Union decided to set up a team of experts to develop a plan to expand the use of the euro and ruble settlement in mutual trade, which will also affect the dollar's share of world trade and reserve assets. Since the current world trade pattern is dominated by the US dollar, the United States can easily freeze the US dollar settlement between Russia and the EU, which is not conducive to Russia's energy sales in the European market, and has a negative impact on Russia and the EU. Therefore, the switch to the euro and ruble settlement between Russia and Europe also has the consideration of weakening the dollar as the world's major currency.
In recent years, the US dollar has gradually lost its status as the world's major currency. It is this status that has brought unilateral economic advantages to the United States and caused damage to the economies of other countries in the world. This laid the foundation for many countries to try to limit the dominance of the dollar and use other currencies to settle, resulting in a decline in demand for expanding the dollar reserve. According to data from the International Monetary Fund, the share of the US dollar in the world's official foreign exchange reserves fell from 68.5% to 61.7% from 2004 to 2018, while the euro rose to 20.68%, while the pound, the yen, the Swiss franc, the Australian dollar, and Canada. The share of the yuan, the renminbi and other so-called non-traditional currencies, including the Russian ruble, has increased.
It is worth mentioning that in the latest World Reserve Assets Report of the IMF, the proportion of RMB assets foreign exchange reserve assets in the first quarter of 2019 has risen to 1.95%, the highest level, and as of the second quarter of this year, overseas institutions hold positions of Chinese bonds. The scale has reached a record high of about 1.65 trillion yuan. Obviously, RMB assets are being welcomed by global investors, and the US dollar will accept successive challenges, which may become an opportunity for the rise of the renminbi.
