De-Dollarization Is Not Over, Warns Chief Economist at CICC

The recent rise in the US dollar’s share of global foreign exchange does not imply that de-dollarization is seeing a trend reversal, said Miao Yanliang, the Chief Economist at China International Capital Corp (CICC). He wrote in a piece in the Financial Times that long-term diversification is real, and the US dollar will not be spared in the global currency markets.

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De-Dollarization Is a Long-Term Trend, US Dollar To Lose Big, Cautions Economist

The economist stressed that de-dollarization will continue due to the faltering US Treasuries. For decades, they have sustained the US dollar’s dominance, but the rising National debt is making central banks reconsider their decision. Diversification, he said, will only keep increasing in the coming years, chipping away at the US dollar’s dominance.

“One reason de-dollarization may persist lies in US Treasuries. For decades, they have underpinned the dollar’s international role by providing deep liquidity and a widely accepted store of value. As US public debt has risen and the international use of financial measures such as sanctions has expanded, some institutions have begun to re-examine their use of Treasuries,” he said.

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