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Why yuan can’t replace dollar as the global currency

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by Kumar David

There is a school of thought (my sparring partners I call them) which contends that the mighty dollar is on its way out as the global trade and reserve currency. Though the argument is flawed it is not without merit. The IMF estimates that China’s economy grew by about 1.9% in pandemic ravaged year 2020 while it declined by 4.3% in the US in the same year. Forecasters now expect the Chinese economy to expand by a stellar 8% in 2021 and the US at a modest 2%; star gazing beyond 2021 is silly till the shape of the post-corvid universe is clearer. Depending on which ‘erudite’ bunch of dismal scientists you consult, the Chinese economy will overtake the American in size somewhere between 2028 and 2032 on a nominal currency basis – it is already bigger on a PPP (purchasing power parity) basis. These numbers are impressive and relevant for a different discussion, viz. choice of a development model (free-market capitalism supported by liberal democracy versus a government-led mixed economy under the guardianship of a strong centralised state) for the developing world if not others as well. But I argue that these striking statistics do not sufficiently support my challengers’ case for the likelihood of the Yuan emerging as an alternative to the dollar as the world’s global currency.

My sparring partners then respond with two other economic trends that are more relevant to the dispute – foreign trade balances and interest rates. China’s trade surplus has averaged about $40 to $50 billion a month since 2015 and in post-covid November 2020 shot up to $75 billion. The high positive trade balance scenario is likely to persist throughout 2021 and 2022 as the rest of the world recovers and imports capital good from China to underpin recovery. Or, other economists argue, it may be a short-lived spike since others will enhance their output and need less from China. (It was Harry Truman who lamented “Oh for a one-handed economist. All my economists say ‘on one hand…’, then ‘but on the other…”). Admittedly the currency of a country with a large trade balance and foreign currency reserves ($1 trillion in China’ case) is a candidate for global status.

The second point that proponents of the Yuan-thesis advance is that China is the only country offering positive interest rates on one-year government bonds after the conventional deflators to deduct the effect of inflation on yields are taken into account. They, my detractors, back it up with remarks like “The whole US$ house of cards will tumble when inflation flares up in the US – already happening but hidden by using bogus inflation measures such as PCE (Personal Consumption Expenditure) inflation, which measures the inflation experienced by the rich 1%. Before long even PCE inflation will exceed 2%”. (The Personal Consumption Expenditure in gross domestic product consists of expenditure of households on durable and non-durable goods and services). I do not agree that PCE is a bogus inflation deflator, but I do concede that an increase in the US inflation rate above the prevailing 1.2% to 1.5% range is very likely. Advocates of MMT that is Modern Monetary Theory (the debt obsessed guys who want to run the electronic money printing press all day and all night) are deluded that inflation is a bogey of a bygone era. I am not a convert to MMT but let that pass; I have discussed it in previous columns.

There are five fundamental reasons why the Yuan cock won’t fight nor win the battle to become the global payments and reserve currency option in the foreseeable future. They are:-

 

= There is nowhere near enough Yuan in circulation to lubricate all global investment and trade. Or to put it in other words; Chinese financial pockets are nowhere near deep enough to meet global needs.

= The Yuan is not freely convertible, either due to restrictions or because some jurisdictions are not in a position to process Yuan transactions with adequate flexibility.

= Chinese financial markets and banks still constitute a relatively ‘closed economy’.

= The dollar’s successor will be a bastard mix of the Dollar, Gold, Euro, Yuan and SDRs – (Yen?).

 

There is about $2 trillion worth of US dollar bills in circulation. It is the most popular currency in use worldwide — central-bank reserves, wealthy people’s cash holdings, and money laundering. Grounded on the historical reach and power of US Imperialism since WW2 and because of America’s political stability (Trump’s attempted coup gave everyone a fright though) it is the most liquid currency as a global store of value and safety net. There is about $5 trillion worth, in all currencies, in circulation throughout the world, most of it domestic except the $, Euro, Pound and Yen. The five trillion is what is called the narrow money supply, which is notes and coins. But using a more inclusive definition of money called broad money the amount is much higher since it adds the money in bank current and savings accounts and money-market accounts. This is all money that can be quickly digitally accessed and used. Estimates of the quantum of global broad money vary; the IMF puts it at $35 trillion and the CIA $80 trillion. Take one more step pertinent to my argument and include global hedge funds and derivatives, investments and market capitalisations, then global financial value is estimated at between $500 trillion and $1000 trillion. I cannot be sure, but say a third or more is capitalised in US$.

The narrow money supply in China is equivalent to $1.2 trillion in US dollar terms and therefore comparable to the US, while broad money supply is estimated as equivalent to $33 trillion, again comparable to US dollar money supplies. But nearly all of China’s money supplies are held within China and Hong Kong. However, it is when it comes to the value of global investments, funds and market capitalisations that a big difference shows up. Ali’s Ant Groups whose recent IPO was thwarted (or deferred) by the authorities is valued at $200 billion, while the market capitalisation of China’s largest banks including Hong Kong’s banks is equivalent to about $2 trillion. It is impossible for me with zero research support to make a proper estimate of the capitalisation of China’s companies and giant corporations (many state owned) and China’s overseas holdings. But I would be amazed if it all tots up to more than $50 trillion, which is only a tenth to twentieth of global financial values. This is what makes the Chinese Yuan far from ready to sally forth as an alternative global currency.

China has a few useful cards up its sleeve that could tilt the balance to a degree if it decided to play hardball. A shift from the $ to Yuan could happen in the oil market if China, as the world’s largest importer, attempted to create a Yuan-denominated crude-oil market. Or if it demand payment in Yuan for its exports, which will handicap the US which doesn’t earn sufficient Yuan through exports to China to pay for imports from China. At this stage in the discussion I think it necessary to interject that China does not want to launch the Yuan as a global currency and as major alternative reserve and payments mechanism. Anyone who is witness to the currency chaos that the US may soon run into would be wary. The reserve currency status of the $ has let America pay for everything by merely printing money. This can go on for only so long as people are willing to accept it for purchases or to hold it as a reserve. Has China been playing a long game to dethrone the $, as one of my discussants suggests? I am not sure, but for sure US sanctions on Chinese and Hong Kong leaders and attempts to undermine Chinese technology companies (Huawei most clearly) must be pushing Beijing nearer the edge. There is evidence that China has been accumulating gold and furthermore the Chinese 10-year bond yield now is relatively high at 3% – meaning the Yuan is payments-secure.

A reserve currency should be a medium of exchange, a unit of account and also a store of value. The $ passes with flying colours on the first two counts but with a real interest rate of -2% it is failing as a store of value compared to the Yuan which offers investors a real interest rate of +1%. But the depreciation of the dollar against major currencies is a slow and uneven process. On balance and taking into account the arguments I have advanced in this column, clearly the Yuan’s day has still not dawned. And there is a sting in the tail for Sri Lanka; the gods atop mount Yuan are not in a place from which to vaporise our foreign debt chaos by magic.



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‘The devil is in the details’ in West Asian peace

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President Donald Trump at the current G7 summit in France. Evelyn Hockstein/Getty Image

It is obviously too early for an outpouring of joy over the seeming cessation of hostilities between the main antagonists in West Asia. While the prospect of there being a measure of calm in the region is being welcomed by considerable sections of the international community, what is ‘on the table’ currently is only a Memorandum of Understanding between the US and Iran to give peace a chance. The hard part in the peace effort remains to be achieved.

In the Middle East of today we have one of the most complex conflicts to break out in modern international politics and the observer would be naive in the extreme to expect a facile and early closure to the tangle. Yet, for the sake of the world’s publics who have been hurting badly in the prolonged hostilities one could only hope that the US-Iran MoU that is expected to be signed by the sides on Friday would lead eventually to a substantive peace. The world’s thanks are due to Pakistan in this connection for its sustained support in the peace drive.

While the sides have agreed to a ceasing of hostilities in the most general terms and have reached accord on the facilitation of uninterrupted oil and gas supplies to the rest of the world, for instance, the ‘devil will prove to be in the details’ in an envisaged comprehensive peace settlement. It is these details that would make or break peace if the negotiations go on in earnest.

Nevertheless, the details would need to be worked out consensually in a spirit of compromise with an eye to the greater good of the world community. Realpolitik or a narrow focus on solely the national interest among the protagonists, for example, would need to give way to a measure of humanity that would encompass within it a consideration of the overall well being of the world. In other words, it is statesmanship that would crucially matter.

The next few weeks would establish whether humanists are ‘asking for far too much’ when they broach the questions at issue in these terms. Yet it is essentially self interest and national security considerations of the first importance that drove the conflict from even prior to February this year and these questions would need to be taken up and resolved to the satisfaction of the US and Iran in the main if some headway is to be made towards a durable settlement.

The nuclear issue would prove to be the proverbial Gordian Knot. From a realistic viewpoint, Iran could not be expected to be without a potential nuclear deterrent in the face of perceived nuclear threats emanating for it from the West and Israel. In the short term, Iran would need to possess this deterrent to a measure, within a mutually agreed international legal framework maybe, until wide agreement is reached on the nuclear tangle. Specifically, Iran’s immediate threat perceptions with regard to her nuclear-powered rivals would need to be defused during initial negotiations.

Ideally it is a world free of nuclear weapons that must be aimed at but since this goal cannot be achieved in the near or medium terms, unfolding negotiations would need to ensure Iran’s absolute security in a world of powers that continue to swear by the nuclear deterrent, if it is to give up the suspected latter capability.

However, it is to the degree to which the present nuclear powers divest themselves of this capability that Iran could be put at ease on this score. Accordingly, it is nothing short of a complete elimination of nuclear weapons from the world that could dissuade keenly security conscious states from developing nuclear weapons of their own with a mass destruction capability.

This is the number one dilemma the international community needs to grapple with going forward and it is to the extent to which it resolves it that a nuclear weapons free world could be envisaged. No doubt, an uphill challenge.

Compelling Israel to support the present negotiatory process constitutes another grueling challenge for the US. Currently the Iranian position essentially is that a Middle East peace is inseparable from a normalization of the security situation in Lebanon. That is, the present Israeli attacks on the Hezbollah presence in Lebanon must cease if a comprehensive peace is to be realized in West Asia.

However, Israel is showing no signs of drawing back from its attacks on Hezbollah strongholds in Lebanon since the security of the Israeli state is being seen as threatened by the militant group. Co-opting Israel into the negotiatory effort therefore would turn out to be a matter of paramount concern for the US.

Moreover, elements in the rightist administration in Israel are seeing the current peace efforts as a ‘sell out’ to the enemies of Israel. They would have none of it. It is left to be seen how the US would be managing these virtual storm centres in the diplomatic process that could very well bring down the overall purported peace drive.

A recent pronouncement by US Vice President J.D. Vance points to yet another problem area in the US’ current peace overtures. He said that, ‘Regional peace and stability includes stopping the funding of terrorist organizations.’ He was obviously referring to the support extended by Iran to Hezbollah when he mentioned ‘terrorist organizations’ but he has given fresh life to the age-old conundrum of ‘Who is a terrorist?’ by these words.

To the Netanyahu government the Hezbollah and other militant organizations fighting Israel are ‘terrorists’ but from the viewpoint of the Iranian regime they are ‘freedom fighters’. This seemingly insurmountable definitional issue would not only stubbornly bedevil the peace effort but could even figure in bringing about its collapse, unless judiciously handled.

Thus, it’s the thorny details that need to be watched to keep the West Asian peace process afloat, once it gets going in earnest. There is no doubt that US President Trump would be receiving a considerable amount of support from the G7 in this historic peace undertaking and his personal appeals to the grouping currently meeting in France for continuous support are likely to elicit a positive response from it.

Likewise, Trump would need to appeal to also the BRICS countries if almost total global support is to be garnered for the peace drive in West Asia. BRICS’ solidarity with the US and the West is likely to carry considerable weight with Iran and other Eastern actors who are key to a sustained peace drive in the Middle East.

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Sri Lanka’s elephant paradox: Govt. counts tourism dollars while playing a dangerous numbers game: Expert

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At a time when Sri Lanka is enjoying a resurgence in wildlife tourism, with elephants remaining the undisputed stars of the country’s national parks and one of its most marketable natural assets, elephant conservationist Supun Lahiru Prakash has sounded a stark warning: the nation is in danger of losing the very species that helps attract millions of tourism dollars while sustaining some of the island’s most important ecosystems.

Supun says repeated claims by authorities that Sri Lanka’s elephant population is increasing, despite the absence of a final survey report and amid continuing elephant deaths, risk creating a misleading narrative that could undermine conservation efforts and encourage retaliation against elephants.

According to Supun, the issue is not merely about numbers. It is about political priorities, scientific credibility and the future of one of Sri Lanka’s most iconic species.

“Repeatedly claiming that the elephant population is increasing appears to be an attempt to hide the Government’s inability to manage the rising annual elephant death rate and the complications of human-elephant conflict,” Supun said.

For decades, the Sri Lankan elephant has been a symbol of the country’s rich natural heritage. It is the centrepiece of wildlife tourism, drawing visitors from across the globe to national parks such as Yala, Udawalawe, Minneriya, Kaudulla and Wilpattu. International wildlife documentaries, tourism campaigns and social media promotions frequently place elephants at the heart of Sri Lanka’s nature tourism brand.

Yet, according to Supun, the country’s conservation policies do not reflect the value of the species.

“On one hand, the Government is enjoying increasing tourism revenue, and elephants remain one of Sri Lanka’s most important wildlife attractions. On the other hand, narratives are being promoted that could encourage retaliation against the very species that contributes significantly to the country’s tourism industry,” Supun said.

According to the First Countrywide National Survey of Elephants conducted in 2011, Sri Lanka had 5,879 elephants. However, official statistics show that 4,167 elephants died between 2012 and 2024.

Supun stressed that these figures represent only the deaths officially recorded by the Department of Wildlife Conservation.

“In a context where more than 70 percent of the country’s elephant population reported in 2011 has died within 13 years, it is difficult to accept claims that the population has increased,” Supun said.

The conservationist pointed out that elephants have the longest gestation period among land mammals and that scientific studies have reported increasing interbirth intervals among female elephants together with high calf mortality.

“When such biological realities are taken into consideration, claims of a dramatic increase in elephant numbers become difficult to understand,” Supun said.

Supun believes that repeated references to increasing elephant populations risk fuelling public hostility towards elephants, particularly among farming communities already affected by crop raids and property damage.

“Such claims can create the impression that elephant populations are exploding and thereby promote retaliation against elephants as well,” Supun said.

According to Supun, Sri Lanka’s elephant crisis cannot be understood solely through population estimates. The real issue lies in the country’s failure to address human-elephant conflict through long-term, science-based solutions.

Sri Lanka continues to record among the highest levels of human-elephant conflict in the world. Every year, hundreds of elephants and dozens of people lose their lives as competition for land and resources intensifies.

Despite the scale of the crisis, Supun says authorities continue to rely on strategies that have repeatedly failed.

Lahiru Prakash

These include driving elephants into protected areas, strengthening electric fences to confine them there and allocating additional manpower to maintain fencing systems.

Supun was also critical of several proposals that emerged from district-level discussions on conflict mitigation, including the sowing of paddy and corn using Air Force drones and the planting of fruit orchards within protected areas.

“Such proposals fail to address the real ecological and social dimensions of the conflict,” Supun said.

While welcoming reports that the Government intends appointing a national-level mechanism to tackle human-elephant conflict, Supun said the challenge required intervention at the highest level of government.

“Given the gravity, complexity and geographical spread of human-elephant conflict, appointing any committee other than a Presidential Task Force is not useful,” Supun said.

He argued that a Presidential Task Force chaired by either the President or the Secretary to the President would be better positioned to overcome the bureaucratic delays and institutional fragmentation that have hindered previous efforts.

Supun also stressed the urgent need to restore and protect elephant corridors and home ranges that allow elephants to move safely across landscapes.

He cited the Koholankala elephant corridor in Hambantota as one example where removing obstacles could help reduce conflict while improving habitat connectivity.

At the same time, Supun questioned policies that permit the allocation of forest lands in areas identified by environmental assessments as crucial elephant ranges and movement corridors.

“The opening of elephant corridors and the protection of elephant home ranges must be carried out scientifically and consistently if they are to succeed,” Supun said.

Beyond tourism, Supun emphasised the ecological importance of elephants.

“Elephants are ecosystem engineers. Through their feeding habits and movements, they help maintain habitats that support numerous other species. In many ways, they create safer and healthier environments for wildlife,” Supun said.

According to Supun, protecting elephants means protecting entire ecosystems and the biodiversity upon which Sri Lanka’s wildlife tourism industry depends.

“By protecting elephants, we are also protecting the biodiversity that makes Sri Lanka one of the world’s premier wildlife tourism destinations,” Supun said.

As Sri Lanka seeks to expand tourism earnings and strengthen its reputation as a wildlife destination, Supun believes the country faces a defining choice: continue with policies that have failed to stem elephant deaths and human-elephant conflict, or embrace a science-based conservation strategy that safeguards both people and wildlife.

Without a fundamental shift in policy and political will, Supun warned, Sri Lanka risks losing not only one of its most iconic species but also the ecological and economic benefits that elephants continue to provide.

“The suffering of both farmers and elephants will only intensify unless meaningful action replaces rhetoric,” Supun said.

 

By Ifham Nizam

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Top Model of the World 2026

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Back-to-back victory for Colombia

Katherine Castaño of Colombia claimed the Top Model of the World 2026 crown, securing a historic back-to-back victory for her country. Angelica Sanchez of Puerto Rico was named first runner-up, and Eunice Deza of the Philippines finished as second runner-up.

Katherine was crowned by outgoing titleholder Natalia Garizabal Vera of Colombia.

Several special category awards, and subsidiary titles, were also presented during the Top Model of the World 2026 pageant.

These awards recognised excellence in modelling, peer support, and regional representation.

Primary Subsidiary Titles

Sri Lanka’s Netalie Withanage: Top 16 at
the grand finale

Miss Globe 2026: Valentina Tabares (Ecuador) — Awarded to the contestant who perfectly balances fashion modelling with traditional beauty queen qualities.

Queen of Europe 2026: Mia Danielle Williams (United Kingdom) — Given to the highest-ranking candidate from a European nation.

Special Awards Recognition

Audience Iconic Award: Charly (Dominican Republic) — Won via the official public online vote, granting her a fast-track direct entry into the Top 6.

Exotic Model of the World: Angel Emeka (Nigeria) — Awarded for exceptional editorial presence and strong runway performance.

Best Body Award: Thailand — Voted directly by fellow contestants at the Flow Spectrum Hotel. The highest-ranking runners-up for this category included Zambia, South Africa, Colombia, and Ghana.

Angelica Sanchez (Puerto Rico): 1st Runner-up

Final Placement

Winner: Katherine Castaño (Colombia)

1st Runner-Up: Angelica Sanchez (Puerto Rico)

2nd Runner-Up: Eunice Deza (Philippines)

Top 6 Finalists: Included contestants from the Dominican Republic, Romania, and Germany.

The pageant, known for focusing on professional modelling careers over just beauty, brought together 36 models from around the globe for two weeks of runway, photoshoots, and cultural events.

Sri Lanka’s Netalie Withanage walked among 36 of the world’s best and powered her way into the Top 16 at the grand finale.

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