Rise of the yuan? Not so fast 💴 💶 💷

In this edition, I spotlight the dollar’s status as a reserve currency for the world’s central banks. Spoiler: the rise of China’s yuan is overblown.

Russia’s central bank “prefers” yuan, central banks are buying more gold, BRICS is setting up a digital currency payments system, Brazil has launched an anti-dumping probe against China, EMDEs are undermining multilateralism in the WTO, Zambia finally gets a deal, and more.

De-dollarization

• Russia’s central bank says it has no choice but to put more of its reserves into yuan, which is pretty dire. Small wonder that a larger share of these have actually been in gold rather than CNY.

• The World Bank recently highlighted how central bank net gold purchases are on the rise:

• In other news and as part of their efforts to decrease their dependence on the USD, the BRICS group is planning on creating a blockchain-based payment system for yet-to-be-created digital versions of their currencies, but this is more analogous to SWIFT than a new currency.

Deglobalization

• Demonstrating the limits of the BRICS grouping, Brazil has launched anti-dumping probes against China amid soaring imports. If this is what intra-BRICS cooperation looks like, with friends like this, who needs enemies?

• With Trump potentially returning to the White House next year and Biden having maintained his predecessor’s protectionist policies, what of the future of US multilateralism?

• Many developing countries have concluded - probably rightly - that the World Trade Organization doesn’t have much to offer them and are now undermining multilateralism there even more than the US is.

• There are many gaps in the sanctions architecture that Hamas manages to exploit as it raises money for its $500mln investment portfolio.

Sovereign debt

• After three miserable years of delays due to obstructive Chinese creditors and a lack of clarity over so-called “Comparability of Treatment” rules, Zambia is at last entering the final stages of its Common Framework sovereign debt restructuring.

• World Bank experts behind the widely-used International Debt Statistics database discuss the shambolic state of sovereign debt transparency. For the G20’s Common Framework debt restructurings, i.e. Chad, Ethiopia, Ghana & Zambia, debt records were “incomplete and often inaccurate” and “Excel spreadsheets had to be manually reconciled - a months-long process that significantly delayed restructuring negotiations.” What a mess.

• Here is a helpful summary of the state of ongoing sovereign debt restructurings:

• In Suriname, the IMF Board has approved the Fifth EFF Review. There has been progress on debt restructuring with official and private creditors, though domestic debt arrears need to be cleared.