2023-08-26 07:47:00
Xinhua News Agency, Beijing, August 26 (International Observation) Promoting local currency settlement cooperation and promoting the diversification of the monetary system – BRICS cooperation highlights the common expectations for the reform of the international financial and monetary system
Xinhua News Agency reporter Xu Chao
The Johannesburg Declaration of the 15th BRICS Summit was released a few days ago. The declaration emphasizes the importance of encouraging the BRICS countries to use their own currencies in international trade and financial transactions with their trading partners, and instructs relevant institutions to promote research on BRICS countries’ local currency cooperation, payment tools and platforms.
International observers believe that in the context of the continuous strengthening of the overall strength of the countries in the “global south” and their increasing weight in the global economy, the reform of the international financial and monetary system should be promoted, the representation and voice of developing countries should be improved, and the international monetary system should continue to move towards The direction of diversification reflects the urgent needs and common expectations of the majority of emerging economies and developing countries.
Keep making breakthroughs
Recently, emerging economies and developing countries have continued to cooperate in the field of local currency settlement and cross-border payment, and more and more countries have promoted cross-border transaction settlement in local currency more frequently, providing strong support for the diversification of the international monetary system.
In energy trade, the trend of local currency settlement is obvious. In March this year, Chinese and French companies completed the first cross-border RMB settlement transaction of liquefied natural gas; in August, India completed the first cross-border settlement of UAE crude oil in local currency. In addition, ASEAN member states have recently stated that they will strengthen the use of local currencies, and many countries have signed various types of local currency swap agreements…
In terms of asset reserves, more and more emerging economies and developing countries continue to promote the diversification of reserves. Global central banks are continuing to increase their holdings of gold after setting a multi-decade gold buying record last year, driven by aggressive holdings by central banks in developing countries, according to a survey by the World Gold Council.
In this context, the progress of RMB internationalization has attracted the attention of all parties. At the beginning of this year, China and Brazil signed a memorandum of cooperation on the establishment of RMB clearing arrangements in Brazil to promote the use of the local currency for bilateral trade settlement. In April, the Argentine government announced that it would use RMB to settle trade in goods imported from China. At present, the RMB is the fifth most active currency in international payments and the fifth largest international reserve currency. It ranks third in the International Monetary Fund’s Special Drawing Rights currency basket, and the level of internationalization is constantly improving.
Urgent demand for diverse development
“For developing countries, a more diversified international monetary system is not only more balanced, but also fairer.” Speaking of the reform of the international financial and monetary system, Yan Li, a senior lecturer at Nanyang Business School, Nanyang Technological University, Singapore, said.
Analysts pointed out that the current international monetary system is too single, and developed countries led by the United States have radically adjusted their own monetary policies out of self-interest, which has brought huge financial risks to developing countries. Emerging economies and developing countries’ demand for diversification of the international monetary system reflects their desire to avoid the negative spillover effects of monetary policies in developed countries and seek more independent economic development.
In recent years, the U.S. monetary policy has been like a “roller coaster” with rapid rate cuts followed by aggressive rate hikes. The United States has taken various measures to maintain the hegemony of the US dollar in the international monetary system, constantly hindering global liquidity, causing capital to withdraw from emerging markets, and increasing the debt risks of developing countries.
An article on the US Business Insider website believes that developing countries are increasingly dissatisfied with the status quo of the US dollar “kidnapping” the global economy and are beginning to seek greater independence in the international monetary system. Taking Asia as an example, Nigel Green, CEO of the Dwell Group, an international financial consulting company, pointed out that promoting the diversification of the international monetary system will give the region with the largest population and the most diverse economy in the world greater flexibility, which is conducive to Asia implements policies in line with its own economic conditions, strengthens trade and investment cooperation in the region, and promotes stability and growth.
Common Expectation for Perfect Governance
Many experts said that promoting the diversification of the international monetary system is an objective requirement for the continuous improvement of the overall strength and global contribution of emerging economies and developing countries, and reflects the common expectation of all countries for improving global economic governance.
Emerging market countries and developing countries have contributed as much as 80% of world economic growth in the past 20 years, and their global GDP share has increased from 24% to over 40% in the past 40 years. Improving the representation and voice of countries in the “Global South” in global governance has become the general expectation of developing countries and the inevitable direction of the development of the times.
Dan Steinbock, director of international business research at the India, China and America Institute, an American think tank, believes that thanks to the population size and economic volume, the BRICS countries promote diversified cooperation in the international monetary system, which will have an impact on the reform of the international financial and monetary system. Active promotion. Steinbock said that under the background that global economic growth is mainly driven by emerging economies, the international financial and monetary system cannot only serve developed countries.
Marcos Pires, director of the Institute of Economics and International Studies at Sao Paulo State University in Brazil, believes that the promotion of currency swaps by developing countries is “an important step towards the establishment of a fair international financial order.”
Jeffrey Sachs, a professor at Columbia University in the United States, said that the status of the US dollar in the global financial system is not commensurate with the proportion of the US economy in the world economy. The US’s frequent “big stick” of financial sanctions against other countries is further damaging the status of the US dollar. The status of currencies other than the US dollar will gradually rise. (Participating reporters: Bian Zhuodan, Li Chu, Liu Yanan)
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