In July, there was a significant adjustment in global currency payments, and the Chinese yuan also achieved a new breakthrough!

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) released its monthly report for July this year, which mentioned: The international payment share of the US dollar soared to 46.4%, setting a new high, and increased by 7 percentage points compared to the same period in 2021, so the international status of the US dollar remains unshakable.

Due to the Federal Reserve's interest rate hikes that began last year, there is still no intention to stop, leading to the US dollar index's performance remaining very strong, with a large amount of international US dollars flowing back to the United States.

In July of this year, the US CPI increased by 3.2%, rebounding for the first time after a year of decline, so the Federal Reserve will not lower interest rates in the short term, and it is highly likely that it will continue to raise interest rates until it reduces the inflation rate to within 2%.

However, on the other hand, each round of interest rate hikes by the United States is not only for reducing inflation but also to carry out the harvesting of global wealth. However, the effectiveness of this wealth harvesting is diminishing. For example, Argentina and China have reached a currency swap agreement, and Argentina has repaid its US dollar debt with the Chinese yuan, which has to some extent weakened the power of the US dollar's harvesting.

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Of course, the Federal Reserve's interest rate hikes are a double-edged sword. If not handled well, it could lead the US economy into an abyss. Continuous interest rate hikes lead to a drying up of market liquidity, with the US banking industry complaining bitterly. Several banks have already gone bankrupt. Once a large bank encounters problems, the impact on the US economy will be severe.

The euro suffered a heavy loss this time. In July, the international payment share of the euro plummeted to 24.4%. Although it is still the second-largest international currency, the gap with the US dollar is increasing.

As early as July 2021, the euro's share was 38.4%. In just two years, it has decreased by 14 percentage points, and now it is less than 25%. Overall, the euro has been on a downward trend.

As a follower of the United States, Europe's fate is completely controlled by the United States. Last year, the timing of the United States' interest rate hike coincided with the outbreak of the Russia-Ukraine conflict, precisely targeting Europe. While the conflict was ongoing, the United States hurriedly raised interest rates, causing a large amount of funds to withdraw from Europe and flow to the United States, allowing the United States to harvest Europe ruthlessly.

After the Russia-Ukraine conflict, Russian energy no longer supplies Europe. The United States took this opportunity to make a big profit from the energy price difference, leading to a surge in European energy prices. This has also directly impacted Europe's manufacturing industry, especially Germany. One of the advantages of Germany's manufacturing industry is the low-cost energy supply from Russia. Now that energy prices have soared, Europe's manufacturing industry has fallen into a predicament.Germany's manufacturing PMI index fell to 38.8% in July, indicating a state of great depression, while our country's PMI in July was 49.3%, with many people pessimistic, yet Germany's is less than 40%, showing how bleak the current state of German manufacturing is!

The economic growth in Europe was already very sluggish, and now Germany, as the "leader" of the European economy, is heading towards economic deceleration and manufacturing decline, which is a cause for concern for Europe's future.

Lastly, looking at the performance of the renminbi, the international payment share of the renminbi in July was 3.06%, making it the world's fifth-largest currency, following the US dollar, euro, pound, and yen, with an increase of 0.87 percentage points compared to the same period in 2021, showing that the renminbi has been steadily improving.

Many people may not understand why the US dollar can reach 46%, while the renminbi is only around 3%. This seems to not match the economic strength of China and the US. Currently, China's GDP has reached 70% of the US, and China is also the world's largest trading nation, with a trade surplus ranking first globally. Why is the international payment share of the renminbi so low?

In fact, the status of the renminbi is inevitably underestimated because this data is released by the SWIFT system, which is a US-controlled transaction system primarily based on the US dollar, and some renminbi transactions are not included in this system.

At present, our country has its own cross-border renminbi transaction system (CIPS). Although it still has a significant gap compared to the SWIFT system, the transaction volume is growing rapidly. Currently, a large part still needs to go through the SWIFT system, and we look forward to it becoming more perfected in the future.

At present, our country has conducted currency swaps with many countries, and the renminbi is quietly advancing in the field of global trade. Recently, the BRICS countries have expanded, adding six new members, including Argentina, Iran, Saudi Arabia, Egypt, Ethiopia, and the United Arab Emirates.

Brazil and Argentina embrace the BRICS mainly to get rid of the control and dependence on the US dollar. Both countries have reached a renminbi trade agreement with our country. The three newly joined oil-producing countries are using renminbi for oil trade with our country. The internationalization of the renminbi is not just a slogan but a quiet layout. Once more oil-producing countries embrace the BRICS and the renminbi, it will have a fundamental impact on the US dollar.

Therefore, the prospects for the internationalization of the renminbi are broad, and it is necessary to continue to layout and strive to develop. However, it is also necessary to clearly recognize that the international status of the US dollar is still stable and difficult to shake in the short term. The internationalization of the renminbi has a long way to go and can only achieve long-term success by maintaining stability.