In a move that is changing the geopolitical landscape of the financial world, Argentina allowed banks to open accounts for customers who intend to deposit using the Chinese Yuan. The Central Bank of Argentina has officially recognized the Chinese Yuan as a currency for customers making deposits in bank accounts. The development also coincided with the BRICS alliance looking to make other countries cut ties with the U.S. dollar.
Also Read: 5 New Countries To Join BRICS Alliance In August
The decision to recognize the Yuan comes at a time when Argentina is struggling to maintain the U.S. dollar as a reserve.
The announcement from Argentina’s Central Bank stated, “The Central Bank of the Argentine Republic has incorporated the Renminbi Yuan as an accepted currency for deposit-taking in savings banks and checking accounts. Financial entities will thus be enabled to open bank accounts denominated in Renminbi Yuan.”
The move gives the Chinese Yuan more power in its fight to challenge the U.S. dollar’s global hegemony. China is advancing to convince developing countries to allow them to trade the U.S. dollar and the Yuan simultaneously.
“Opening Yuan accounts could attract more people and enterprises to exchange Argentinian Peso to Yuan, as more or less a ‘safe haven’ currency, instead of exchanging all of their local currency to U.S. dollars,” Chinese economist Dong Jinyue to the South China Morning Post.
Also Read: 41 Countries Ready To Accept BRICS Currency a Month Before Summit
BRICS: Argentina Looks To Enter The Bloc By Recognizing Chinese Yuan?
Argentina is looking to enter the BRICS bloc and accept the new currency for cross-border transactions. The Latin American country is looking to reduce its reliance on the U.S. dollar and seeking alternative currency options. If the new BRICS currency gains the trust of developing countries, the dollar could be the hardest hit currency.
The move could tilt the global powers from the developed nations to the developing countries around the world. Therefore, the future of the U.S. dollar depends on how well the BRICS currency performs in the foreign exchange markets.
The next BRICS summit will be held in South Africa in August. BRICS is an acronym for Brazil, Russia, India, China, and South Africa. The group of five nations will combinedly decide on the formation of a new currency to take on the U.S. dollar.