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Towards a New Gold Standard? Or a Currency War with China?

Peter Koenig

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Rumors have it that the remaining months of 2020 may bring drastic and explosive changes in the world’s financial system. But such “doomsday” rumors have been floating around every beginning of fall during the last few years. Why? – The US dollar is getting weaker and weaker. It is not quite on a free fall, but still remains a major trading currency and a key world reserve currency. And for many economists that’s difficult to understand.

However, it is unlikely that that the collapse of the dollar will come from one day to the next. That would not be good for the world economy, as still too many countries depend on the dollar.

Facts are,

i) China’s foreign exchange reserves have just increased to US$ 3.112 trillion equivalent, of which about US$ 1.3 trillion denominated in US-dollars – and in general forex-reserves continue to grow;

ii) within short, possibly by the end of 2021, the Chinese yuan, or renminbi  (RMB) could become the world’s third largest reserve currency, after t.....