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Alan W. Dowd is a Senior Fellow with the American Security Council Foundation, where he writes on the full range of topics relating to national defense, foreign policy and international security. Dowd’s commentaries and essays have appeared in Policy Review, Parameters, Military Officer, The American Legion Magazine, The Journal of Diplomacy and International Relations, The Claremont Review of Books, World Politics Review, The Wall Street Journal Europe, The Jerusalem Post, The Financial Times Deutschland, The Washington Times, The Baltimore Sun, The Washington Examiner, The Detroit News, The Sacramento Bee, The Vancouver Sun, The National Post, The Landing Zone, Current, The World & I, The American Enterprise, Fraser Forum, American Outlook, The American and the online editions of Weekly Standard, National Review and American Interest. Beyond his work in opinion journalism, Dowd has served as an adjunct professor and university lecturer; congressional aide; and administrator, researcher and writer at leading think tanks, including the Hudson Institute, Sagamore Institute and Fraser Institute. An award-winning writer, Dowd has been interviewed by Fox News Channel, Cox News Service, The Washington Times, The National Post, the Australian Broadcasting Corporation and numerous radio programs across North America. In addition, his work has been quoted by and/or reprinted in The Guardian, CBS News, BBC News and the Council on Foreign Relations. Dowd holds degrees from Butler University and Indiana University. Follow him at twitter.com/alanwdowd.

ASCF News

Scott Tilley is a Senior Fellow at the American Security Council Foundation, where he writes the “Technical Power” column, focusing on the societal and national security implications of advanced technology in cybersecurity, space, and foreign relations.

He is an emeritus professor at the Florida Institute of Technology. Previously, he was with the University of California, Riverside, Carnegie Mellon University’s Software Engineering Institute, and IBM. His research and teaching were in the areas of computer science, software & systems engineering, educational technology, the design of communication, and business information systems.

He is president and founder of the Center for Technology & Society, president and co-founder of Big Data Florida, past president of INCOSE Space Coast, and a Space Coast Writers’ Guild Fellow.

He has authored over 150 academic papers and has published 28 books (technical and non-technical), most recently Systems Analysis & Design (Cengage, 2020), SPACE (Anthology Alliance, 2019), and Technical Justice (CTS Press, 2019). He wrote the “Technology Today” column for FLORIDA TODAY from 2010 to 2018.

He is a popular public speaker, having delivered numerous keynote presentations and “Tech Talks” for a general audience. Recent examples include the role of big data in the space program, a four-part series on machine learning, and a four-part series on fake news.

He holds a Ph.D. in computer science from the University of Victoria (1995).

Contact him at stilley@cts.today.

EXPLAINER-China, Russia vulnerable to dollar risks as sanctions from West multiply

Thursday, March 25, 2021

Categories: ASCF News Economic Security

Comments: 0

A US Dollar

BEIJING/MOSCOW, March 23 (Reuters) - Russian Foreign Minister Sergei Lavrov began a visit to China this week with a call for Moscow and Beijing to reduce their dependence on the dollar and Western payment systems, and push back against what he called the West's ideological agenda.

It comes after years of souring relations between the United States and China over trade and national security issues, and long-standing tensions between Russia and the United States.

In the latest development, the United States, European Union, Britain and Canada on Monday imposed sanctions on a handful of Chinese officials for alleged human rights abuses in Xinjiang, opening the door to potential joint penalties.

RISKS IN DOLLAR DEPENDENCE
The dollar's global dominance gives the United States an outsized influence over the world's financial system, while its actions against foreign companies can have far-reaching consequences given it is home to the world's largest economy and some of the biggest global companies.

Given the influence of the dollar and U.S. banks in global financial flows, the United States dominates the Belgium-based SWIFT financial messaging service, a network used by banks across the world to make transactions. It could in theory use this influence to reduce other countries' access to the global financial system.

Hong Kong leader Carrie Lam said last year she had to pile up cash at home as she was unable to open a bank account in the global financial centre since Washington sanctioned her after Beijing imposed a national security law on the city.

WHAT HAS CHINA DONE SO FAR?

As it looks to reduce its dependence on the greenback, China has been pushing to internationalise the yuan amid fears of a deepening financial war with the United States.

To this end, it has been using its Belt and Road initiative to promote trade in the yuan, and has signed local currency swap agreements with many of the participating countries, including Russia.

Beijing has also been encouraging the use of its homegrown alternative to SWIFT, known as the CIPS clearing and settlement services system, where 135.7 billion yuan ($19.4 billion) a day was processed in 2019, according to CIPS. Most of China's cross-border transactions, however, are still settled in dollars via the SWIFT system.

China's holdings of U.S. Treasuries meanwhile fell to the lowest levels since 2017 in October, but have since risen again, according to the U.S. Treasury Department.

WHAT HAS RUSSIA DONE?

Russia has been taking steps to reduce its dependence on the dollar for years, particularly after ties with the West deteriorated over Russia's annexation of Crimea in 2014 and its role in the Ukrainian crisis.

Russia and China have also sought to reduce bilateral trade denominated in U.S. dollars, with Russia's dollar-denominated exports to China falling to 61% in the first three quarters of 2020 from 90% for the total of 2013, according to data from Russia's central bank.

At $6.15 billion in January, Russia's holdings of U.S. Treasuries were well below the record high of $176.3 billion it owned in October 2010.

Similarly to China, it has set up its own banking messaging system, known as SPFS, as an alternative to SWIFT. Its own card payment system MIR began operating in 2015 and it has significantly expanded the role of its own financial transactions clearing house in recent years.

Russia also said in February it added the yuan and Japanese yen to its National Wealth Fund to diversify its savings.

WHAT'S NEXT?
With around 56% of global central bank reserves held in U.S. dollar in the third quarter of 2020, according to IMF data, the greenback remains the world's reserve currency of choice.

The yuan has some way to go to catch up.

Only 2% of global central bank reserves are held in the Chinese yuan, although Morgan Stanley analysts expect this share could increase to 10% by 2030.

But yuan internationalisation is seeing renewed enthusiasm amid fears of worst-case scenarios under which China is blocked from dollar settlements, or Washington freezes or confiscates a portion of China's huge U.S. debt holdings.

China's central bank has urged financial institutions to expand yuan trade and prioritise local currency use in direct investment. Beijing has also fast-tracked plans to develop a sovereign digital currency.

(Reporting by Gabriel Crossley and Stella Qiu in Beijing and Katya Golubkova in Moscow; additional reporting by Elena Fabrichnaya in Moscow; Editing by Ana Nicolaci da Costa)

Photo: CREDIT: REUTERS/THOMAS WHITE

Link: https://www.nasdaq.com/articles/explainer-china-russia-vulnerable-to-dollar-risks-as-sanctions-from-west-multiply-2021-03

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