When you think of the dollar, what comes to mind? The rapid development of the U.S. economy? The core currency of the world's financial system? Or as the dominant settlement currency for international oil transactions? In fact, the position of the dollar is in jeopardy, and it is likely to be replaced in the next 15 years. This sounds like a fantasy, but the reasons behind it are closely linked.
Imagine that when global oil demand peaks and gradually declines, the demand for the dollar will also be significantly reduced. This, coupled with the depletion of oil resources, has laid the foundation for the operation of the dollar. At the same time, China's leading position in the field of green energy and the steady progress of the internationalization of the renminbi are expected to reach the pinnacle of the international monetary system. How do you think about it, will the dollar really be replaced?
In recent years, the forecasts of some authoritative institutions on global oil demand have given us an important lesson: oil demand is likely to peak and gradually decline in the next 15 years. This forecast is not unfounded, but is based on two main reasons.
First, with the increasing awareness of global climate change, governments around the world are accelerating the adjustment of energy structure and reducing dependence on fossil fuels such as oil. For example, many state governments in the United States have set phased goals to phase out traditional fuel vehicles and instead support the development of new energy vehicles such as electric vehicles. The EU has also set out a long-term plan to achieve overall carbon neutrality by 2050. It can be seen that the world's major economies are moving away from the demand for oil in response to climate change.
Second, rapid advances in electric vehicles and renewable energy technologies will also significantly reduce the demand for oil in the future. Taking electric vehicles as an example, the battery technology of companies such as Tesla has advanced by leaps and bounds, and the range of a single vehicle is rising, which can almost meet the needs of most drivers. Coupled with the improvement of the charging pile network, people's acceptance of electric vehicles is increasing day by day. At the same time, the cost of renewable energy such as photovoltaic and wind power continues to fall, increasing its share in the global energy mix. If the degree of dependence is reduced, the demand for oil will naturally be affected.
Thanks to the "oil + dollar" system, oil is mainly settled in US dollars, providing a stable global demand for the US dollar. But now, when oil demand peaks and declines, the system will be hit hard. It is clear that the international circulation and demand for the dollar will inevitably plummet, and its dominance will be self-defeating.
Moreover, the eventual depletion of oil resources is one of the long-term threats to the dollar. When there are fewer and fewer easily exploitable fields, oil prices will continue to rise. As you can imagine, the continued spike in the cost of oil extraction will not only drive up the cost of running the economy, but may also accelerate the development of oil alternatives, thereby reducing dependence on oil. At that time, the world's energy and financial markets are likely to suffer heavy losses, and the hegemony of the dollar will also be in jeopardy.
At the same time, China's deep accumulation in the field of green energy, coupled with the steady progress of the internationalization of the renminbi, shows the potential to stand at the top of the global economy in the future. As we all know, China is not only the world's largest investor in renewable energy, but also a major producer of major clean energy equipment. In the case of solar panels and wind turbines, for example, made in China accounts for more than half of the global market share. If we can seize the opportunity of the surge in global green energy demand and give full play to the advantages of technology and production capacity, China's green energy industry will surely become a new economic growth point and inject more impetus into the internationalization of the RMB.
In addition to its leading position in the field of green energy, the mainland government is also actively promoting the internationalization of the renminbi. On the one hand, by expanding the scope of cross-border RMB use and signing multilateral local currency swap agreements, we are ready for RMB to play a greater role in international trade settlement.
On the other hand, the renminbi is also constantly being combined with green financial products, providing new asset allocation options for international investors. For example, the green bonds issued by the Chinese government must be used to support energy conservation and environmental protection projects, which has good social benefits. Moreover, these green financial products tend to have higher yields, which also gives investors more returns. By joining hands with green industries, the international influence and attractiveness of the renminbi will naturally increase significantly.
In fact, not long ago, the international scholar Rutledge announced that oil transactions would soon be settled in yuan. Although the specific credibility of this statement is still uncertain, it at least reflects that the world is opening the door to the internationalization of the renminbi. As the world's transition to a low-carbon economy accelerates, China's central position in this process will surely increase, and the RMB and the green energy industry will be mutually beneficial, and it is expected to build a new international monetary system that can stand shoulder to shoulder with the US dollar.
Looking at the world, changes in the geopolitical landscape have also created favorable conditions for the internationalization of the RMB. For example, both China and Russia are actively promoting the use of their national currencies in bilateral trade and moving away from dependence on the US dollar. At the same time, the rise of new multilateral financial institutions such as the New Development Bank of the BRICS countries is also striving to build a new international financial order. Under this wave, the renminbi will have more opportunities to compete with the dollar.
Clearly, with the rise of the green economy and the formation of a new geo-economic pattern, the RMB and the US dollar are expected to compete in the next 15 years. The renminbi will take advantage of the momentum and become a new option for international trade, investment and reserves, gradually eroding the dominance of the US dollar in the international financial system. At that time, commodities, including oil, may use the renminbi as the main settlement currency, and the position of the US dollar will be unsustainable.
Although the construction of a new international monetary system will not be achieved overnight, the historical process of the rise of the renminbi has already begun. In the future, in the process of working hand in hand with green energy, the RMB will surely show greater international influence and eventually reach the peak of the international monetary system.
epilogue
The dominance of the US dollar as an international reserve currency has been challenged by the twin challenges of peak oil demand and depletion of resources. Once international oil transactions no longer rely on US dollars for settlement, the demand for US dollars will drop sharply, and the circulation will also drop sharply. In this process, the mainland will accelerate the internationalization of the renminbi by virtue of its leading advantages in green energy technology and production capacity, and contribute to the construction of a new international monetary system.
Despite the bumpy road ahead, the opportunity for the renminbi to rise has arrived. As long as we take advantage of the momentum and persevere, we will certainly be able to stand up to the tide of the world's new energy revolution and win the renminbi's due position in the international monetary system. Let us hope that in the next 15 years, the renminbi will replace the US dollar and become the leader of the new international financial order with its inherent strength!