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Original Title: Zhang Ming: After the New Crown Epidemic, the International Status of the US Dollar May Rise Rather Than Fall
Since March 2020,American dollarThe index fell 8%. Most people believe that the United States government has thrown a lot of money in response to the new corona pneumonia epidemic.financialcoinThe policy will seriously weaken the international status of the dollar. However, ChinasocietyZhang Ming, deputy director of the Institute of Finance of the Academy of Sciences, believes that after the epidemic, the US dollar has become a global payment currency, transaction currency and storage.SupplyThe status of the currency can be strengthened again.
Zhang Ming in a copyreportChina noted that while the new corona pneumonia epidemic has affected the United States, it has also affected other major developed economies. Furthermore, compared to other developed countries, the United States has introduced large-scale fiscal and monetary stimulus policies at a faster rate and in greater magnitude, which will likely cause the US economy to recover faster than other developed countries.
“The main competitor of the US dollar has not been able to stay out of the impact of the new corona pneumonia epidemic. Today, the world most capable of challenging the potential of the US dollar as an international currency isEURHowever, the new corona pneumonia epidemic has an impact on the European economy and finances.marketThe impact of the United States is not much less. “Zhang Ming said.
“After the outbreak, Republicans and Democrats dropped their previous suspicions and quickly reached agreement on a huge $ 2.2 trillion fiscal stimulus plan. In contrast, the EU has been unable to agree on an expanded fiscal stimulus plan.” he added.
According to internationalMonetary FundAccording to the latest forecast issued by the International Organization (IMF) on Tuesday local time, the US economic growth rate will fall from 2.2% in 2019 to -3.4% in 2020.EurozoneThe economic growth rate will fall from 1.3% in 2019 to -7.2% in 2020. Looking at the performance of the European and US economies this year, the IMF predicts that the US economic growth rate is expected to be. Hit 5.1% and the Eurozone could be 4.2%.
Another reason Zhang Ming is bullish on the US dollar is that the continued turmoil in the global financial market is expected to strengthen the US and US dollars.National debtThe status of safe haven assets.
Said AmericacompanyThe bond market, the sovereign bond market in southern Europe and some emerging market countries with weaker fundamentals such as Argentina, Turkey, South Africa and Malaysia are the top three potential risks in the global financial market. but,InlandThe series of rescue actions taken by the Reserve Bank has somewhat alleviated the risk of large-scale defaults in the US corporate bond market. By contrast, southern European countries and emerging markets have higher risks. Once a local financial crisis breaks out,short termThe outflow of capital from these countries or other countries and the return of capital to the US market for hedging remains a high probability event.
Zhang Ming also pointed out that even in the context of the US government’s large-scale “water release.” Last year, foreign countriesinvestmentHolders did not significantly reduce their holdingsAssets in USD. In the first nine months of 2020, foreign investors bought the United States long-term.ValuesThe monthly average scale is US $ 6.04 trillion, higher than the monthly average of US $ 4.99 trillion in 2019. In March and June 2020, when the new corona epidemic is on the rise, purchases of securities to long-term US by foreign investors reached US $ 8.81 trillion and US $ 6.38 trillion.
Also, believe thatInlandReserve-led bilateral dollarto exchangemechanismAfter the outbreak, it expands and strengthens again, and may be upgraded to global liquidity comparable to that of the IMF in the future.supplyMechanism, which will also help consolidate the international status of the dollar.
Long before the outbreakInlandThe Reserve Bank has reached long-term agreements with the top five central banks in Canada, Europe, the United Kingdom, Japan and Switzerland, allowing them to increase dollar liquidity when financial institutions are under pressure. On March 19, 2020, the Federal Reserve announced that it will cooperate with the central governments of 9 countries, including Australia, New Zealand, Brazil, and South Korea.BankCreate temporary USD liquidity swap agreements.
“It is worth noting that the current bilateral dollar swap system led by the Federal Reserve has covered almost all large developed economies and someMarket economyBody. Zhang Ming said: “If this system continues to expand in the future and seeks long-term multilateralization and institutionalization, this means that the Fed will start over and rebuild a new global liquidity supply mechanism outside the IMF.” “
He also mentioned that many of the unilateralist and protectionist measures taken by the Trump administration may in fact weaken the US dollar.International reserveMonetary status, but the current Biden administration has a high probability of returning to Obama-era multilateralism, which means that the damage to the reputation of the US dollar caused by the Trump administration’s policies may be partially offset by the Biden administration.
(Article source: Interface News)
(Responsible editor: DF062)
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