US-China Crypto Rivalry: A Prelude to Cold War II? IMF Warns
- China's De-dollarization Push and the Impending Threat of Cold War II
- The US-China Rivalry Intensifies
- IMF's Warning: The Onset of Cold War II
- Financial Impact of The Cold War II
China's De-dollarization Push and the Impending Threat of Cold War II
China, a BRICS member, is actively pursuing de-dollarization efforts on a global scale, causing concerns over the future of the US dollar. The nation is making strides to undermine the US dollar's supremacy as the global reserve currency. The Chinese government is making rounds worldwide, persuading developing countries to abandon the US dollar in favor of local currencies for trade.
The US-China Rivalry Intensifies
The tension between China and the US is escalating, potentially leading to another cold war, warns an official from the International Monetary Fund (IMF). This could significantly impact financial markets, leading to a potential downturn.
IMF's Warning: The Onset of Cold War II
The First Deputy Managing Director of the IMF, Gita Gopinath, voiced her concerns that the rivalry between China and the US bears the potential risk of escalating into a second cold war. She explained that the relationship between the two superpowers has reached a critical juncture.
In the Cold War, it was the US and the Soviet Union, now it is the US and China. But the stage on which these forces are unleashed is fundamentally different along several dimensions, Gopinath remarked. She warned that fault lines are becoming apparent as geo-economic fragmentation is increasingly becoming a reality.
Financial Impact of The Cold War II
Gopinath emphasized that the US and China are on the cusp of another cold war. While she stated that financial markets might not take a drastic tumble immediately after the outbreak of a new cold war, she predicted a long period without growth for investors if such a situation arises. This could eventually lead to market crashes in the upcoming years.
If we descend into Cold War II, knowing the costs, we may not see mutually assured economic destruction. But we could see an annihilation of the gains from open trade. Ultimately, policymakers must not lose sight of those gains. It is in their and everyone's best interest to advocate strongly for a multilateral rules-based trading system and the institutions that support it, Gopinath concluded.
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