Several countries, including Argentina, Brazil, Saudi Arabia, and India, have used the Chinese yuan in their transactions, including dealings with the International Monetary Fund (IMF) instead of the US dollar.
The Chinese yuan ranks fourth globally in international transactions, following the US dollar, the euro, and the Japanese yen.
In 2016, China succeeded in making its local currency, the yuan, one of the international reserve currencies through negotiations with the IMF.
Argentina decided to repay some of its $2.7 billion debt to the IMF in Chinese currency.
This move comes two months after the Argentine government announced its intention to pay for Chinese imports in yuan instead of the US dollar to reduce the depletion of its foreign currency reserves.
Brazil, the largest economy in Latin America, agreed with China in March of last year to abandon the dollar and use their local currencies in bilateral trade transactions.
China is Brazil’s largest trading partner, with the total trade value reaching about $150 billion last year.
Bolivia is considering expanding its foreign trade using the Chinese yuan to counter the shortage of the US dollar. This decision is seen as a solution to currency problems faced by several Latin American countries.
In recent months, several countries, including Saudi Arabia, Bangladesh, India, Pakistan, and Iraq, have traded in yuan or expressed readiness to do so.
The US dollar still accounts for 41% of global foreign exchange reserves and 60% of global payment currencies. The dollar comprises 60% of international debt and 52% of international loan payments.