Who can shake the supremacy of the US dollar?

In the new decade starting in 2020, the hegemony of the US dollar, which occupies a monopoly position in the world economy, will be seriously threatened.

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The dollar's trend in the capital market is as usual

Over the past decade to Dec. 30, 2019, even as the Federal Reserve pumped more than $2 trillion into the financial system and doubled the U.S. national debt, the value of the U.S. dollar rose 24 percent.

According to data from the International Monetary Fund, the dollar's share of central bank foreign exchange reserves is about 62%, unchanged since January 1, 2010. The second-ranked euro, once viewed by some leading economists as a potential rival to the dollar, has seen its share of central bank reserves fall from 26 percent to around 20 percent over the past decade.

The yen, once seen as a threat to the dollar in the 1980s, now accounts for just 5.4 percent of central bank reserves. The British pound, which had ruled the global market for a century, now accounts for only 4.4% of the central bank's stock market. As Brexit approaches, the future of the pound is also uncertain. China's currency, the renminbi, has never accounted for more than 2 percent of central bank reserves despite decades of rapid economic growth and Beijing's efforts to expand the yuan's influence in international trade and payments.

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A sign of declining dollar dominance?

The dollar's dominance is taking a hit, however, as a growing number of economists and leaders say the international monetary and financial system looks unsustainable, or unfair.

Because the U.S. imports more goods from other countries than it exports, U.S. consumers benefit disproportionately from the strength of the dollar.

Global demand for dollar-denominated assets has kept interest rates such as U.S. Treasuries low even as the U.S. federal budget deficit tops $1 trillion a year. This dynamic encourages governments, businesses and households to take on increasing amounts of debt that could be difficult to repay if borrowing costs suddenly rise.

"It's like the shepherd is crying wolf," said Martin Baily, a senior fellow in economics at the Brookings Institution who served as chairman of President Clinton's Council of Economic Advisers in the late 1990s. Unfortunately, sometimes wolves do coming."

Bank of England Governor Mark Carney's speech in August calling for change stood in stark contrast to the dollar's strength over the past year. Carney, from Britain's Oxford University, is sought after by top currency experts and has previously served as governor of the Bank of Canada and an executive at Wall Street firm Goldman Sachs.

Carney told the U.S. central bank at the Fed's annual meeting in Wyoming that the dollar's dominance has not only contributed to turbulence in emerging market countries, but has also contributed to a "global savings glut" that keeps interest rates artificially low. His speech raised concerns among Fed Chairman Jerome Powell, especially since he has come under harsh criticism from current U.S. President Donald Trump for raising interest rates.

“History has shown that extremely low interest rates are often accompanied by high-risk events such as wars, financial crises and the collapse of the monetary system. If these problems are ignored, the problems will only be exacerbated,” Carney said.

According to Carney, an alternative to the U.S. dollar with a digital currency backed by a multi-national central bank digital currency network could be beneficial to the international monetary system. “The concept is interesting. Technology has the potential to disrupt the external factors that prevent the loss of the existing global reserve currency,” he said.

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Who can shake the dominance of the US dollar for a century?

The dollar replaced the pound as the world's primary currency in the early 20th century.

Today, more than ever, the dollar is ubiquitous. Banks around the world are stockpiling dollars to meet the needs of local businesses and residents for the currency to use for commerce and payments. Central banks reserve dollars and dollar-denominated assets such as U.S. Treasuries so that they can satisfy local banks' demand for dollars.

Dollar-denominated cross-border bank lending accounted for a world-leading 14 percent of total global lending in 2018, up from 9.5 percent a decade earlier, according to the Bank for International Settlements. U.S. Treasuries are by far the largest government bond market in the world, worth about $17 trillion and growing. Major global commodities such as oil and gold are priced in dollars.

"No other asset market has the depth or liquidity of the dollar asset market," said Eric Winograd, senior economist at Alliance Bernstein, which has $592 billion in assets under management.

In the crypto market, bitcoin, the largest cryptocurrency by market capitalization, is also often quoted in dollars, and a growing number of digital "stablecoins" are also pegged in value to the greenback. Libra, a digital asset proposed by social media giant Facebook, would also be 50 percent backed by the U.S. dollar.

Even China's planned digital yuan could trade like a proxy for the dollar. Because, at least so far, the Chinese government has pegged the value of the yuan to an index of major currencies dominated by the U.S. dollar.

Edwin Truman, a senior fellow at the Peterson Institute for International Economics and in charge of the Fed's international finance department from the 1970s to the 1990s, said, "The renminbi is not really working yet."

It took almost 30 years for the dollar to eventually replace the pound as the reserve currency of choice after the U.S. economy overtook the U.K. in the early 20th century. Harvard University economist Jeffrey Frankel attributes the lag to "inertia," essentially the cost and hassle of changing routine payment methods and rewriting legal contracts.

Analysis today

Analysis today

According to a series of actions in the United States, gold rose sharply in the middle of the night, and Bitcoin also reversed the situation!

1.4 Market Analysis

Among the mainstream currencies ETH, EOS, LTC, and BCH, Crown Prince BCH performed the best.

BTC: After Bitcoin fell to around 7250 last night, it fell again and rushed to a new high. The main observation here is 7400. It will be difficult to break through here for a while, so the bigger shock in the short term . Oscillating above 7280 is to maintain a strong price, so here is a short-term low-buy, and more importantly, at the same time, beware of short-term pinning to the limit of 7500.

ETH: The trend of Ethereum is much weaker than that of Bitcoin. The current trend is a shock, and it is a weak shock. Here, high selling is the best. Front highs plus a little space are best. The following support is mainly concentrated on the 131 line.

What is supporting your courage to stay in the currency circle, was it given by Liang Jingru?

The investment road is very lonely, especially when there is no direction. When we (VX:pzzz393) are watching the market, we will discuss and discuss together, and many directions will come out. How lonely it is to walk alone, and you will always meet such people People, let's gather together to deeply cultivate the users of the C-end currency circle, hold the money in the pocket, and earn the money in the market!