De-dollarization $ The Global Issue, And its Relevance!!!

Issue of de-dollarization

De-dollarization refers to the decreasing use of dollars in international transactions by the respective countries!!

However, most countries have taken the pledge to decrease the use of the dollar in the market to reduce its dependency on the US dollar.

Some of the factors accelerating de-dollarization

• The rise of BRICS economies working on alternative currencies like the Yuan, Ruble, Yen, etc.
• Russia-Ukraine war-propelled Ruble bases trade to bypass US sanctions
• US Federal Reserve’s extreme policy- countries decoupling from the US dollar.
• Strategic autonomy concerns, I.e India, China, and Russia are trying hard enough to internationalize their respective currencies.
• China’s effort to counter the dollar. I.e Remmitted in SDR(Special Drawing Rights) bucket.

Further, our discussion led question Does the US dollar lose its relevance????

Yes!!

• Economic gravity shifted to China, Russia, and India I.e the economic advancement of these countries made their currencies compete against the economic giant, the United States
• The emergence of new currencies, i.e. Euro in Europe, the Rupee, the Yuan, and the ruble in Asia.
• Declining influence of the USA on the global economy and its policies. Ex- In the Arab world. I.e Oil crisis.
• Failure of the US to back Ukraine during Russia Ukraine conflict. Failed to make Ukraine a NATO member.

No!!

• The USA continues to remain the world’s largest economy i.e. GDP of 26.95 Trillion.
• It’s a huge economy and its engagement with other countries through various institutions like NATO, UNITED NATIONS, QUAD, G7, G20, etc.
• Failure of other countries to provide a better alternative to the US dollar.
• The US is highly dominant in institutions like the Swift Mechanism, the IMF, and the World Bank, where there is less scope for other currencies.

The present de-dollarization trend continues to weaponize against the dominance of the US dollar in the market and to counter it. But the fact dollar has primacy over international trade. It is noted that countries should make their currencies strong to counter the trend of the US dollar.

Comment your views below!!!