Bolivia has made a significant move by adopting the yuan for its imports and exports, joining other South American nations like Brazil and Argentina in challenging the dominance of the US dollar in the region’s international financial transactions.
The state-owned Banco Union facilitates these electronic transactions.
While the yuan’s current use is relatively small, analysts predict its prevalence will increase over time, especially in countries seeking stronger ties with China and looking to reduce their reliance on the US dollar.
China’s expanding presence in Latin America and the Caribbean through increased trade and investment has also facilitated the yuan’s adoption.
Critics have raised concerns about the move, viewing it as a temporary solution to Bolivia’s economic woes rather than a long-term strategy.
However, experts argue that amid the scarcity and high cost of the US dollar due to global macroeconomic conditions, many central banks worldwide are exploring alternative currencies.
Despite the growing appeal of the yuan, experts acknowledge that a widespread shift from the US dollar is unlikely in the immediate future, partly due to the relatively closed nature of China’s financial system.
Nonetheless, China’s push for the yuan’s internationalization is gaining traction as countries recognize the need for viable alternatives.