Posted 19 апреля 2022, 08:25

Published 19 апреля 2022, 08:25

Modified 24 декабря 2022, 22:36

Updated 24 декабря 2022, 22:36

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The share of the dollar in international trade settlements remain high, the role of the yuan in international finance remains at the level of an error

19 апреля 2022, 08:25
Фото: Соцсети
Even if all the physical oil in the world is sold for other currencies, the turnover of dollars in the process of determining the price of oil will be many times greater than the turnover of these currencies for physical oil.

Rumors about the imminent oblivion of the American currency and its replacement with the Chinese one are not just very much exaggerated, but have no basis at all, says political analyst Dmitry Nekrasov:

“Over the past month, three different Russians have already told me in different contexts about the transfer of China’s oil payments from KSA to yuan, as a significant event. And even though the news about the transfer of settlements was not confirmed (there were statements about such negotiations, but not about a decision), its rapid spread in the Russian information bubble is a much more curious fact than the content of the news itself.

The interest of certain circles in such news stems from the picture of the world of the Khazin-Glazyevs and other people with caveman ideas about the economy, who often repeat the following logical chain: the power of the United States is based on the ability to print the dollar - the ability to print stems from the fact that the dollar is the key currency for international settlements - the more trade settlements will be translated into other currencies, the sooner the “meltdown” will come to the dollar and the United States.

The main hopes of people with such a mindset for "meltdown" are associated with an increase in the share of the yuan in international settlements.

What is the main defect of such logic, I will tell a little lower, but first a few words about the current situation with the shares of the dollar and the yuan in the world.

If we talk about the share of the dollar in international interbank settlements, international reserves, international obligations and other financial indicators, then it fluctuates in the range of 50-90%, depending on what and how they think. In terms of these indicators, the role of the dollar today is approximately the same as it was 30-40 years ago, slightly higher than in the early 2000s, but lower than in the first half of the 2010s. In general, it is quite stable.

If we talk about international trade settlements, then the share of the dollar in them is approximately 40% (it must be understood that settlements within the eurozone are also international, if they are removed, the dollar's share will increase markedly).

The role of the yuan in international finance remains at the level of an error, while in international trade it has indeed been growing in recent years. Increased up to 2%!

At the same time, it should be understood that it is growing to a large extent due to the physical growth of China's foreign trade volumes. Yuan as a currency of settlements between third countries is practically not used. It can be formulated differently: the foreign trade turnover (import + export) of the United States and China is approximately the same (about 4 trillion dollars a year), each of them accounts for a little more than 10% of world trade turnover, while 40% of world settlements are carried out in dollars, i.e. e. ¾ of dollar settlements are not related to US trade itself, and in yuan 2%, i.e. 5 times less than the actual Chinese trade.

It would seem that this should end, but I decided to write this post because many do not understand that trading calculations are just the visible tip of the iceberg.

On the NYMEX alone, WTI oil futures alone make 1.2 billion barrels of transactions per day on average, i.е. 12 times more than the world's oil is extracted per day. And there are other exchanges, and other varieties of the same Brent. I think the overall oil futures market is about 50/1 related to international physical oil deliveries. Even though this ratio is smaller in money terms, futures settlements also greatly exceed those for physical oil. And also for all other raw materials. And almost all futures markets are denominated in dollars. Added to this are derivatives markets, insurance, and much, much more. Those. even if all the physical oil in the world is sold for other currencies, the turnover of dollars in the process of determining the price of oil will be many times greater than the turnover of these currencies for physical oil.

And if we look at the next level of abstraction, we see that Alibaba ADRs alone in New York are traded at an average of $3 billion per day. Those. the annual volume of dollar-denominated trading in just the shares of one US-listed Chinese company is approximately ¼ of the annual turnover of China's entire foreign trade (and this does not include the turnover of all complexly structured products on top of shares). With more than 250 Chinese companies listed on the US exchanges, there is not the slightest doubt that the turnover of dollar-denominated instruments pegged only to shares of Chinese companies alone greatly exceeds the turnover of Chinese foreign trade. But ADRs of Indian, Brazilian, European and any other companies still circulate in the USA. And their own bonds are also circulating there. And also endless derivatives, default insurance, etc. etc.

It is clear that all these are somewhat different aggregate states of money and it is not entirely correct to compare them directly, but the essence of this does not change: the turnover of financial instruments is many times greater than the turnover of any commodity markets. More broadly, the amount of money servicing transactions in the asset markets (not just financial ones) is increasingly separated from the amount of money servicing transactions in the markets for goods and services. And the role of this or that currency in world finance is determined to a much greater extent by its role in the asset market than in commodity markets.

Even if we argue in the cave logic that I outlined at the beginning of the post, then if companies from China did not place their shares in the United States, and vice versa, some companies from conditional Brazil and Indonesia would begin to place their shares / bonds on the Chinese stock market, this would affect the ratio of the value of the yuan and the dollar in the world to a much greater extent than the conversion to yuan of any settlements in the commodity markets. However, even this could hardly affect the possibilities of the American issue. Part of the reason why was in my old article.