Economists and world leaders now face the possibility that the Chinese Yuan could replace the U.S. dollar as the world’s primary currency for use in foreign trade.
In a letter to JP Morgan’s shareholders, chairman Jamie Dimon acknowledged the growing influence of big tech firms (Facebook, Amazon, Google etc.) and their use of “shadow currency systems” that operate with AI programs and digital tracking support.
The Chinese Yuan is already part of a digital currency framework, systems that operate in some ways like the blockchain ledgers of cryptocurrency. These systems are able to track production of exports from the initial source all the way down to the consumer level, with AI systems marking cost and revenue at each stop.
Customers who use the Yuan’s currency could, in theory, set up inventory management systems, payment contracts and smart logistics all through AI systems. This would eliminate the need for long-term contracts due ahead of time or potential risk of market fluctuation.
This system will not “dethrone” the current financial system where the U.S. Dollar currently dominates the game. E
conomic journalist David P. Goldman suggests that this system would instead “make the current financial structure redundant”, and would see a reduction in the $16 trillion held in international banks for exchange purposes.
This $16 trillion is held primarily because it is what banks lend in, as well as the Euro. This number has remained largely unchanged despite the fact that the U.S. only exports 8% of the total world exports for trade. China now exports 12% of the world’s trade and is steadily climbing.
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