Bolivia in South America is challenging the U.S. dollar hegemony as it increases the use of the Chinese yuan in international transactions.
According to the U.S. AP on the 28th (local time), Bolivia’s Economy Minister Marcelo Montenegro said at a press conference on the 27th, “Bolivia carried out financial work worth 278 million yuan between May and July this year.”
“We are already using the yuan. It’s a reality and a good start, he said. “Exporters in banana, zinc and wood manufacturing are not importers of vehicles and capital goods, but are trading in yuan.” The electronic transactions are made through the state-run bank Bancoonion.
He added, “The amount used in yuan is still relatively small, but it will increase over time.”
Montenegro’s minister also mentioned last month, “Since (the yuan) is an important currency in global trade, it is worth opening a bank (a Chinese bank) or account operated by the yuan.”
With this move, Bolivia joined South America, Brazil, and Argentina as countries that use the yuan for international payments. The move reflects China’s increased influence in the region due to increased trade and investment.
Bolivia began using the yuan in February as a severe shortage of dollar reserves continued for months, affecting the national economy. Bolivian President Luis Arce said earlier this month that the South American Andean country was looking for alternatives amid the dollar liquidity crisis.
The move was ahead in Brazil and Argentina.
Brazilian President Luiz Inacio Lula Daciuba, who visited China in April, questioned, “Who decided to make the dollar a (base) currency after the gold standard disappeared?”
At the end of last year, the yuan emerged as the second most important currency in Brazil’s central bank. While 5.37% of the central bank’s foreign exchange was yuan, only 4.74% of the euro issued by the European Union (EU).
Earlier this year, the Argentine government unveiled a plan to use the yuan to pay for Chinese imports as a way to preserve foreign exchange reserves. Furthermore, he raised the possibility of using the yuan to repay debts to the International Monetary Fund (IMF).
However, experts believe that despite these moves, it is unlikely that a large-scale transition to the yuan will occur in a short period of time.