On Tuesday (November 7th), the world's largest asset management company at the Bloomberg Innovation Economic Forum in SingaporeBeled(BlackRock) CEO Larry Fink said that the dominance of the dollar will not last forever, and the US dollar's reserve currency status is affected by US sanctions.
Just last month, Russian President Vladimir Putin also warned that the United States will weaken the dollar’s reserve currency status because of its sanctions.
Larry Fink pointed out that the expansion of the US budget deficit is the biggest risk of the dollar's global dominance, although the dollar's loss of dominance may not happen tomorrow or next year, but over time, with the United Statesinterest rateThe rise and the pressure of the federal government on huge debts, the creditors eager to buy US Treasury bonds will gradually disappear.
The United States has not cooperated with creditors (such as China), but has involved them in an inspiring trade war to form confrontation. Larry Fink said that in his experience, it is not wise to confront creditors. "The problem is that we have a very large deficit and we are fighting global creditors. I don't recommend that you fight with creditors. 40% of the US deficit is funded by outside investors. There is no other country in the world that has a similar situation." .
Larry Fink believes that as the deficit widens, government debt climbs, "interest rateToo high, which will not support economic growth will become a problem that the United States must face. We will increase debt because of the deficit, and because of the deficit, investors will demand higher returns, which will drag the stock market, along with the economy. Slowing down, the $1.3 trillion deficit will be a big problem.
From the historical cycle, the cycle of the US dollar as the dominant currency of the global financial system is nearing completion. In the past 600 years, the historical cycle of each dominant currency has been about 100 years, and the dollar has gone through 80 years.
In addition to the threat of US government debt, we recognize that the rise of other countries is also a threat. Just like the history of the British Empire and the Soviet Union, the reason why the US dollar has the dominant position in the world is because of its economic strength. In the early 20th century, the US economy surpassed the British Empire, and then the US dollar replaced the British pound. Now China’s economic strength is also Is it overtaking the United States, does it mean that the renminbi will replace the dollar?
(countriesGDPAccounting for global GDP)
Of course, the decline in the dollar’s status may be a good thing, the world.bankFormer chief economist Lin Yifu once said that the dominance of the dollar is the root cause of the global financial and economic crisis. Lin Yifu advocates replacing the dollar and other countries' currencies with a global super-sovereign currency.
However, China and Russia are pursuing their own programs, going to dollarization, stepping up to reserve gold, or getting their currencies on the international stage.
(Article source: Huizhong Information)