Unprecedented decline in Euro usage signals shift to USD, Yuan
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Euro's global payments usage via the SWIFT system plummets, favoring the US dollar and Chinese yuan, with the Euro at a historic low of 24.4%.
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Euro banknotes are displayed on a table in Munich, Germany, on March 30, 2022 (AP)
The Euro has experienced an unprecedented decline in its usage for international payments via the SWIFT system.
Recent data from SWIFT, reported by various media outlets this week, has shed light on a remarkable shift towards the US dollar and the Chinese yuan in global financial transactions.
According to a report from RIA Novosti, the July 2023 statistics indicate a stark decrease in the global share of transactions involving the Euro, the world's second-most popular currency. The usage of the Euro in international payments plunged to a historic low of 24.4%, marking a substantial decline of 6.83% when compared to the preceding month.
Conversely, the percentage of payments conducted in US dollars has seen a notable surge, reaching 46.4 percent. Additionally, the Chinese Yuan has demonstrated a robust performance, surpassing 3 percent in international settlements. This achievement signifies the highest level the Yuan has reached since early 2022 and aligns with Beijing's ongoing strategy to facilitate the global adoption of its currency, as nations demand an alternative currency for international trade.
The shift in payment preferences comes at a time when alternative communication systems between banks have been steadily emerging over the past few years, presenting new options beyond the traditional SWIFT framework.
In response to the economic sanctions imposed by the United States in 2014, Russia took proactive steps to establish its own national payment system called the System for Transfer of Financial Messages (SPFS). This system enables the seamless exchange of financial messages between banks, irrespective of their location within or beyond the borders of the Russian Federation.
Furthermore, Russia introduced the Mir card in December 2015 as a viable alternative to international payment giants MasterCard and Visa. The Mir card has gained significant traction, finding active usage across multiple countries.
As the dynamics of global finance continue to evolve, these shifts in payment preferences and the rise of alternative systems highlight the complex interplay of economic strategies, geopolitical factors, and technological advancements shaping the landscape of future international financial transactions.
Read more: Making sense of a self-induced recession in Europe
