But countries that border China will look favorably at this. I can see I dis using Yuan; or the south Asian countries.
You and I both know that whatever gets people oil cheaper will win. And “cheaper” not not just the retail price. It’s the carry and transport cost. It’s the cost of debt. And it’s the benefit of Yuan reserves.
Just the fact that a large % of the traffic won’t require dollars means that those dollars are no longer “needed” in reserves. That causes the sale of dollars, and they come rushing back to the US.
THAT is what we are trying to avoid. If we cannot “force” markets to accept dollars, we cannot control interest rates or inflation.
This will happen slowly at first….and then it will be a logarithmic whirlwind.
There is little doubt that the US Treasury has been politicized and that the unprecedented printing of trillions of paper dollars, non productive spending and the resulting inflation has disconcerted central bankers around the world
. However its a stretch to argue that these bankers will be anxious to substitute yuan for dollars as a mechanism of trade or as their reserves. The value of the yuan is controlled by China’s central bank which is directly controlled by the Communist Party Politburo. They make policy that allocates capital and political decisions, including war that affects the value of the yuan. Would you,after all things are considered put your country’s economic well being in the hands of the Chinese Communist party by holding yuan as a big percentage of your reserve currency?