US Dollar Will Remain Global Reserve Currency, Says It ‘Has Great Inertia’ – Economics Bitcoin News

Zhou Xiaochuan is a former governor at the Chinese central banking. His comments seem to be a cold refutation of claims that digital currencies could overthrow the U.S. Dollar anytime soon. Xiaochuan said the dollar still “has great inertia.”

The process to change the role of dollar is very slow

The former governor of the Chinese central bank, Zhou Xiaochuan, insisted in a recent interview that “unless there is [a] change in the global landscape” the U.S. dollar will remain the global reserve and payment currency. While he admitted that digital currencies could potentially become alternatives to the dollar, the former governor claimed that any process to change the role of the dollar is likely to be “very slow.”

In his remarks while being interviewed by CGTN, Xiaochuan, however, suggested that policy “mistakes” by the U.S. government might potentially have a bearing on the dollar’s continued dominance. Xiaochuan is the Boao Forum for Asia vice-chairman. He points out the misuse of the dollar to sanction countries as one example of such a mistake. Xiaochuan explained:

To give an example: If you depend too heavily upon the dollar system to impose financial sanction, you’ll find people hiding from you. Your role in payments and reserve will also decline.

Still, the former governor cautions that using the dollar system to impose sanctions just like other factors will not lead to the sudden waning of the currency’s dominance. He said when looked at from the perspective of reserves or from that of value storage, the dollar “has great inertia.”

“You can’t say that the things you saved before are suddenly useless,” argued Xiaochuan.

People used to use the Dollar Payment System

The former governor stated that people are so used to receiving dollars as a payment it is difficult to switch to a different method of payment.

Xiaochuan, despite not believing in alternatives to the US dollar’s prospects, suggested that China supports a global reserve not dominated solely by the one currency.

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Terence Zimwara

Terence Zimwara, a Zimbabwean journalist, writer and author who has been awarded the Zimbabwe Booker Prize. He is a prolific writer on the economic woes of African countries, as well as digital currencies that can be used to provide an escape path for Africans.