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ChatGPT predicts US dollar dominance will give way to a multipolar currency system as China's yuan gains influence
Business Insider USBrian Evans
Feb. 12 2023
AlexSava/Getty Images
- Insider asked OpenAI's ChatGPT to weigh in on whether the US dollar or China's yuan would be the world's dominant currency in the future.
- The chatbot asserted that a "multipolar" system was likely, instead of a system dominated by one or two currencies.
- ChatGPT also noted the rise of both the euro and yuan in international trade.
That's according to ChatGPT, the popular artificial intelligence chatbot created by OpenAI. In response to a question on whether the US dollar or the Chinese yuan would be dominant in the future, ChatGPT declined to choose between the two.
Both currencies have their pros and cons, and it's possible that neither will at the top in the future, it said, pointing to a more diverse set of currencies.
"The US dollar has been the dominant international currency for much of the past century, and it remains widely used and accepted as a store of value, a medium of exchange, and a unit of account," ChatGPT said. "Its widespread use, particularly in international trade, gives the US dollar significant influence on the world stage. However, in recent years, there have been efforts to reduce the dollar's dominance and increase the use of other currencies, such as the euro and the yuan, in international transactions."
As for the yuan, China has been gradually increasing its role in the global economy in recent years, becoming more widely used in international trade and investment, it added.
Beijing has also sought to internationalize the yuan, also known as the renminbi, and make it a more attractive alternative to the US dollar.
"In conclusion, predicting which currency will be dominant in the future is uncertain, but it is likely that the world will see a shift towards a more multipolar currency system, in which several currencies play a significant role, rather than one dominant currency," ChatGPT predicted.
The response is notable in that ChatGPT's knowledge base only extends to the end of 2021, meaning that last year's moves away from the US dollar didn't factor into its prediction.
In 2022, the US and its Western allies froze Russia's foreign exchange reserves and kicked it out of the SWIFT financial system in response to Moscow's war on Ukraine.
Since then, attempts to erode the dollar's dominance have emerged, including Russia and China opening talks last year to develop a new reserve currency with other BRICS countries as well as an effort by Russia and Iran to create a cryptocurrency backed by gold.
China is also pressing Middle East countries to make oil deals in the yuan instead of the dollar, and analysts have said the rise of a so-called petroyuan will gain momentum. And Bloomberg reported over the past week that large Indian refiners are shifting away from the US dollar in order to purchase Russian crude.
Meanwhile, ChatGPT's currency prediction contrasts with that of "Dr. Doom" economist Nouriel Roubini, who wrote in the Financial Times recently that a bipolar currency system will emerge dominated by the dollar and the yuan.
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