New dollar?

December 1 The International Monetary Fund (IMF) included the Chinese yuan in the basket of reserve currencies The IMF included the yuan in the list of currencies, based on the value of which countries are calculated with each other for loans and various fund programs. In order not to offend anyone, the IMF does not issue loans in dollars or euros, but in a conditional unit of account called "special drawing rights" (SDRs). Its rate is calculated based on the exchange rates of countries that have the largest share in the capital of the IMF. So far it has been the US dollar, euro, pound sterling and yen. Now there are five "IMF currencies". The IMF's decision, of course, determines only the value of the SDR - now it will also be influenced by the dynamics of the yuan exchange rate. Formally, it does not dictate anything to any countries, does not affect how corporations from different countries settle among themselves and in what currencies households keep their savings.

Nevertheless, the IMF's decision has exacerbated the ever-flaring speculation about when the position of the US dollar as the world's reserve currency will be shaken by the growing Chinese economy. Now the vast majority of the world's savings, whether owned by national banks, households or businesses, is held in dollars. It is also most convenient for counterparties from different countries to settle accounts with each other in dollars, unless they are firms from different countries within the eurozone. In fact, the dollar has been the main means of payment in the world for 90 years, and for about 70 years it has been performing this function exclusively (having pushed aside the British pound and gold).

The United States and corporations from this country do not receive gigantic benefits from the fact that their currency has special functions in the world. The main advantage: borrowings are cheaper, it is more convenient to do business with foreign counterparties, there are no currency risks. The US has the ability to live in debt almost indefinitely (with a deficit budget and current account), and its maintenance is obscenely cheap. The main disadvantage: easy funding from around the world is pushing the US to live beyond its means. Hence, for example, the recent mortgage crisis, hence the easy rises (and subsequent falls) of the American stock market.

Will China become the new America in all these senses? If yes, then very soon. Firstly, America needs to try very hard to make it inconvenient and unprofitable for residents of other countries to save and pay in dollars. The best remedy for this is the uncontrolled growth of budget and current account deficits. But the US keeps a close eye on both — even under a Democratic president. Secondly, the dollar has a more serious (so far) competitor than the yuan - the euro. The competitor is not problematic, but influential. Thirdly, the yuan is not yet a freely convertible currency in the full sense of the word, although it is stubbornly moving towards this.

Most likely, the world is gradually moving towards a system with many international currencies, says the leading theorist on this issue, Barry Eichengreen of the University of Berkeley. First, the euro and yuan will be added to the dollar, and in the future, the Brazilian real and the Indian rupee. So it was already: 400 years ago, pounds, francs and pesos were used on an equal footing in international settlements. And in any case, before becoming one of the global currencies, the yuan will have to win the status of the leading regional currency - when the trade with China of the countries around it and their savings pass to the yuan. And China certainly has such plans. By the way, this is also why the Russian “pivot to the East” in 2014-2015 is good news for the yuan, but bad news for the ruble. Turning the ruble into even a regional currency, turning away from Europe and treating the CIS countries as satellites, will not work for Russia. But the chances of the yuan for a brighter future are increasing.

In fact, the dollar has been the main means of payment in the world for 90 years, and for about 70 years it has been performing this function exclusively.