Author Topic: Oct 2020: "Most used currency"  (Read 82 times)

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Offline chrisild

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Oct 2020: "Most used currency"
« on: November 19, 2020, 11:56:05 PM »
According to a Bloomberg article published today, "The euro was the most used currency for global payments last month, the first time it has outpaced the dollar since February 2013." Here is the story:

Dollar Loses to Euro as Payment Currency for First Time in Years

Christian

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Re: Oct 2020: "Most used currency"
« Reply #1 on: November 20, 2020, 08:47:50 AM »
I suspect this compares apples and eggs, as internal payments (from one euro country to another) are counted as international, all the more because the reasons given for the decline in USD payments should have worked even more against funding in USD. I also suspect that the USD payments decline is correlated with the price of oil, remaining at around USD 40, a historical low since 2004 and far away from its apex at USD 140 in June 2008 (source: Trading Economics).

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline chrisild

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Re: Oct 2020: "Most used currency"
« Reply #2 on: November 20, 2020, 11:09:23 AM »
The methodology was, as far as I know, not changed in the past couple of years. So you may say the stats are flawed, but they were the very same in 2019, 2018, etc. when the USD was "ahead". :) The figures are from Swift's RMB Tracker (which focuses on the global role of the yuan renminbi); they can be downloaded here.

Global payments currencies (in %), Oct-2018 > Oct-2020:
EUR 34.24 > 37.82
USD 39.71 > 37.64

Same but excluding payments within the euro area:
USD 43.15 > 41.71
EUR 36.25 > 38.52

Christian

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Re: Oct 2020: "Most used currency"
« Reply #3 on: November 20, 2020, 11:25:11 AM »
My oil argument is based on the fact that almost all oil trading is settled in USD. If the price of a barrel of WTI is USD 40 today and USD 140 in 2008, that means that in 2008, 3.5 times as many dollars would have changed hands for the same quantity of oil. Therefore, a drop in settlements in USD in this period says nothing about the "popularity" of USD, but only reflects oil price developments.

The argument on internal settlements means that the whole €-curve should be adjusted downward for internal transactions. If internal transactions remained the same in the years shown, the adjusted curve would be exactly parallel with the original curve, but on a lower level.

Neither argument rests on changes in method.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.