According to data released by SWIFT, global currencies are experiencing a major upheaval and adjustment, especially the US dollar and the euro, which have undergone significant changes.
The Chinese yuan has also achieved considerable breakthroughs.
Barring any surprises, the next 10-20 years will see a major reshuffling of international currencies, with the old order being challenged and a new order quietly emerging!
SWIFT has published the international currency payment share for July this year (the August data has not yet been released), and the US dollar share has reached a staggering 46%.
This is particularly impressive given that the US dollar already had a high share and has still managed to achieve a substantial increase, leading one to marvel at the seemingly unassailable international status of the US dollar.
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But is this really the case?
In the same period in 2021, the US dollar's share of international payments was 39.38%, and now it has risen to 46.46%, a significant increase indeed.
However, this rise in the US dollar's payment share is closely related to the sharp decline of the euro, almost to the point where it can be said that it is the drop in the euro's share that has facilitated the rapid rise of the US dollar, with the US dollar encroaching on part of the share that the euro has lost.
According to SWIFT data, the euro's payment share plummeted to 24.42% in July, falling below 30%.
It's important to note that in the same period in 2021, the euro's payment share was as high as 38.43%, very close to that of the US dollar, but now it has plummeted by 14 percentage points, a significant drop.
The euro's sharp decline can be attributed to several factors.
On one hand, the continuous interest rate hikes by the US have led to a global flow of US dollars back to the US, and Europe is no exception.
On the other hand, Europe's current economic performance is poor, with slowing export trade and stagnating manufacturing, especially in Germany, which is considered the economic engine of Europe, experiencing negative GDP growth for two consecutive quarters and a persistently weak export situation.
This has led to a significant decrease in the trade share settled in euros within Europe.
Additionally, Europe's energy used to be primarily imported from Russia and settled in euros, but now Europe's demand for Russian energy has significantly decreased, leading to a reduction in the euro's settlement share.
It is clear that the euro's sharp decline in payment share has been the greatest benefit to the US dollar.
The US dollar's payment share has increased by 7 percentage points, meaning that half of the share lost by the euro has been entirely consumed by the US dollar, while the other half has been divided among other currencies such as the British pound, Japanese yen, and Chinese yuan.
Furthermore, in July, the British pound's payment share was 7.63%, an increase of 1.64 percentage points compared to the same period in 2021; the Japanese yen's payment share was 3.51%, an increase of 0.77 percentage points; and the Chinese yuan's payment share was 3.06%, an increase of 0.87 percentage points.
The international payment share of the Chinese yuan has once again broken through 3%, while the US dollar's share is at 46%.
Does this stark difference mean that the US dollar's position remains unassailable and unshakable?
In fact, the 3% figure for the Chinese yuan is released by the SWIFT system and does not fully represent the true strength of the yuan in global payments.
It can be clearly stated that the yuan is severely underestimated, and it can also be said that the yuan has not shown all its strength within the SWIFT system.
On September 4th, Jin Zhongxia, Director of the International Department of the People's Bank of China, stated at the China International Financial Annual Forum that from January to July this year, the yuan's share in global trade in goods reached 24%, setting a new high level.
It is important to note that China has already established its own cross-border yuan system (CIPS).
Although CIPS is currently not on par with the US dollar-dominated SWIFT system, the transaction volume of CIPS is growing rapidly, with strong momentum and great potential.
At present, China has implemented currency swaps with several countries, allowing for direct settlement in yuan in trade transactions, bypassing the US dollar.
For example, 80% of trade between China and Russia is already settled in yuan.
Trade with countries such as Brazil, Argentina, and Iraq is settled in yuan, and Middle Eastern oil-producing countries, including Saudi Arabia and Iran, have also begun to use the yuan for oil trade with China.
The US and Europe's move to expel Russia from the SWIFT system and freeze Russian dollar assets is a direct blow to their own credit and has made many countries realize the drawbacks of relying on the US dollar.
Since 2023, more and more countries have been using their own currencies for settlement, actively bypassing the US dollar.
Even Russia's oil trade with India is now settled in yuan.
The recent expansion of the BRICS group to 11 countries has directly challenged the hegemonic status of the US dollar.
The BRICS countries have announced that they will use a new common currency for settlement, creating a new international economic order.
The inclusion of oil-producing giants such as Saudi Arabia, Iran, and the United Arab Emirates further undermines the foundation of the petrodollar system.
The global push for currency diversification is gradually being realized, and the internationalization of the yuan is also expected to face significant opportunities.