The making of a new reserve currency is underway as Russia and China have initiated plans to move away from the US dollar. Putin has stated that “creating the international reserve currency based on the basket of currencies of our countries is under review.” This move was followed by heavy US sanctions imposed on Russia for the war in Ukraine which crippled the Russian economy. Moreover, China has an excellent reason to shift away from the dollar in bilateral trade after the US imposed burdening tariffs on all Chinese exports. This new convergence of interest could have a momentous impact on the economic world order.

Since the beginning of 2013, Russian Central Banks have begun to replace its dollar reserve with the yuan, euros, and most importantly, rare earth minerals like gold, uranium, and copper. While the US is closing in at around 30 trillion dollars in debt, Russia and China have been stockpiling gold for approximately 20 years. This brings up a series of issues for the US as the dollar is a debt-based currency after President Nixon took the US dollar off the gold standard in 1971. As tensions between these superpowers rise, de-dollarization efforts will further provide economic independence for BRICS nations (Brazil, Russia, India, China, and South Africa) and offset any countermeasures the US deploys whether it is in the form of sanctions or tariffs. 

Further pressure has been placed on foreign relations as Nancy Pelosi’s visit to Taiwan prompts outrage from China. Pelosi, the highest ranking official to visit Taiwan in 25 years, is a strong advocate for democracy and the recognition of Taiwan as an independent nation. She has also vocally condemned China’s human rights acts and its control of nations such as Hong Kong and Taiwan. China viewed Pelosi’s visit as a violation of Chinese sovereignty and threatened the US with a strong military response. President Xi has privately asked President Biden to “not play with fire,” as the Nimitz-class supercarrier USS Ronald Reagan and its strike forces have entered the South China sea as contingency measures.

Tensions are at an all-time high as both sides enter a stalemate from which neither wants to back down from. China has begun a series of live-action military drills alongside deploying tanks, fighter jets, and artillery from its coastal cities across from Taiwan to showcase its military prowess. In response, the US is sending more assets to protect speaker Pelosi and Taiwanese forces have now entered stage 2 of combat readiness. Even after Pelosi departs from Taiwan, tensions remain as 5 Chinese ballistic missiles have landed in the waters surrounding Taiwan in a blatant attempt to intimidate the country. Whether it is unlikely that China will initiate a full-scale invasion of Taiwan, officials state they are ready to counter any moves that violate their sovereignty.

권네이슨 강남포스트 학생기자  webmaster@ignnews.kr

<저작권자 © 강남포스트, 무단 전재 및 재배포 금지>