If China was a rule of law country without capital controls you’d be right, but nobody is rushing. Yuans are worthless unless you want to buy goods in China and if you amass too much, the Chinese government can control how it’s used without much recourse. This is a country whose government banned Winnie the Poo on social media because somebody started a meme of Poo and Tigger walking next to a photo of Obama and Xi walking.
The only real alternatives today are the Euro and to a lesser extent the Japanese Yen, and they have their own issues (in particular, the Eurobond market is fragmented between its member states and while the EU does issue its own bonds, it’s not institutionally or politically designed to issue at massive levels). Even Russia, which tried to bypass sanctions and sell oil direct to India was left with either collecting in rupees (that it couldn’t really spend much of) or in rubles (which India had a hard time finding a market to trade rupees for).
But again, don’t underestimate the basics of recourse in rule of law. You can own shit tons of US Treasuries and still speak ill of or go against the US government or its leaders. Do you think Saudi Arabia or anybody else wants have to bend the knee to anybody else?
Russia is doing quite well getting around the dollar. Others are following their lead.
You are likely correct in other parts of your reply. Only time will tell. I think the trending direction is clear...
Also, rule of law in the U.S. just isn't what it used to be. Many other countries have seen what the U.S. has done with Russian money kept in Western banks.
> Russia is doing quite well getting around the dollar. Others are following their lead.
"Quite well" is debatable. There's large amounts of overhead and complexity involved and Russian energy is being sold at a huge discount.
> Also, rule of law in the U.S. just isn't what it used to be. Many other countries have seen what the U.S. has done with Russian money kept in Western banks.
Seizing money isn't against the rule of law - that would be like saying a country doesn't have freedom because criminals can be locked up. There's due process and some sanctioned Russian Oligarchs have gotten removed against the US government's wishes because of that - same in Europe.
The only real alternatives today are the Euro and to a lesser extent the Japanese Yen, and they have their own issues (in particular, the Eurobond market is fragmented between its member states and while the EU does issue its own bonds, it’s not institutionally or politically designed to issue at massive levels). Even Russia, which tried to bypass sanctions and sell oil direct to India was left with either collecting in rupees (that it couldn’t really spend much of) or in rubles (which India had a hard time finding a market to trade rupees for).
But again, don’t underestimate the basics of recourse in rule of law. You can own shit tons of US Treasuries and still speak ill of or go against the US government or its leaders. Do you think Saudi Arabia or anybody else wants have to bend the knee to anybody else?