Dollar dominance may give way to a "tripolar" currency system

According to information published by Business Insider, experts note that the status of the dollar as the world's reserve currency in the near future remains stable and is not subject to serious threats. However, in the long term, two other currencies, namely the yuan and the euro, are likely to outperform the dollar.

Economist and CEO of Eurizon SLJ, Steven Jen, expressed his opinion about the formation of a "tripolar" reserve currency system in the future.

He noted that the nominal share of the dollar in world reserves has declined 10 times faster than over the past 20 years. At the same time, while the dollar will retain its status as the world's reserve currency, it will have to share that status with other currencies.

Euro and yuan are the most promising contenders for this role, according to Jen. However, the yuan needs an improvement in China's financial sector in order for it to move forward as the world's reserve currency. Currently, foreign investors are avoiding buying Chinese stocks and bonds due to capital controls in the country. Therefore, it will be difficult for the yuan to become a stable international currency.

Despite the fact that the volumes of settlements in yuan in bilateral trade of other countries are still small and cannot be compared with the volumes used for settlements in euros.

It is also noted that in March of this year, the yuan for the first time surpassed the US dollar in terms of use in cross-border transactions with China. In addition, central banks are moving away from the dollar and switching to gold as a hedge.