Can a Digital Renminbi Challenge the Green Back?

The US Dollar has reigned supreme in global trade and finance. But China is challenging that supremacy with its new digital Yuan.

Since WWII, the Bretton Woods system has had control of global finance and trade. After WWII, global powers at the Bretton Woods conference agreed to create the International Monetary Fund (IMF) and the World Bank. Also, after WWII the US had the most powerful economy and military in the world. For this reason, the US Dollar was crowned the world’s reserve currency. This means that all trade in the world is conducted by US Dollars. All trade conducted by US Dollars means that there would be an ample amount of demand for US Dollars. The Bretton Woods system did go through a bit hiccup when President Nixon went off the gold standard. But things changed even more for the US Dollar when then-President Richard Nixon and his Secretary of State Henry Kissinger went to Saudi Arabia and guaranteed the Kingdom’s protection in return for OPEC selling oil in US Dollars. This means that all oil trades were done in US Dollars (this was also known as the PetroDollar). This increased the demand for US Dollars even more. Many, like former French President Charles de Gaulle, called America’s power in global trade and finance an “exorbitant privilege.” But can the US…