Secretaire-Referenznetzwerk.com reported on May 14 that according to a report from the website of Hong Kong's South China Morning Post on May 13, since the global financial crisis in 2008, China's efforts to make the renminbi an international or regional currency have only achieved limited success. However, since Trump began his second term, the situation has changed. The Trump administration threatened to impose additional tariffs on trading partners and proposed the idea of the "Mar-a-Lago Accord" with the aim of forcing major US trading partners to accept a devalued dollar.

The report analyzed that against this background, the old idea of creating an Asian Monetary Fund has become increasingly popular, which is part of a broader plan to reduce dollar exposure.

The report noted that at the annual meeting of finance ministers and central bank governors from the Association of Southeast Asian Nations (ASEAN) and China, Japan, and South Korea (10+3) held in Milan this month, the willingness of Asia to create a regional financial safety net to reduce dependence on the dollar was evident.

The report said that as the world's second-largest economy with $3 trillion in foreign exchange reserves, China will play a core role in the development of any regional monetary arrangement. At the 10+3 meeting in Milan, the People's Bank of China stated that the introduction of rapid financing tools that can be funded by non-dollar freely usable currencies such as the renminbi marks "positive progress toward diversification of the international monetary system in this region."

The report considered that under this mechanism, member countries in need of emergency liquidity support in the region can borrow renminbi funds instead of dollars. The inclusion of the renminbi in the so-called rapid financing mechanism has effectively recognized it as a "freely usable currency" and a candidate reserve currency. As the other two major countries in the region, Japan and South Korea have begun to recognize the importance of establishing regional partnerships in the absence of full reliability from the United States.

The report also noted that reaching consensus among these three neighboring countries on financial cooperation is no easy task. The uncertainty brought by US tariff policies and monetary plans has finally brought them together.

The backdrop for enhanced coordination in this region is that the renminbi is enhancing its international image on other fronts. For example, bilateral renminbi payment systems with many Belt and Road Initiative countries are progressing steadily.

In the past few years, when the dollar was strong, those receiving renminbi would want to quickly convert it into dollars. However, if the dollar begins to weaken, the willingness to hold renminbi assets may significantly increase. As reported by our correspondents in Africa, African businessmen are increasingly avoiding the use of dollars and turning to the renminbi.

However, the report also pointed out that despite this, making the renminbi an alternative to the dollar in Asia will still take many years.

But the trend is clear: as the strength of the dollar declines, the influence of the renminbi in the region will increase. (Translated by Li Sha)

Original article: https://www.toutiao.com/article/7504138691629662757/

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