“Are we witnessing the beginning of de-dollarization?”
April 11, 2022
“…However, the long-term challenge for the U.S. will be to keep the crown on the U.S. dollar’s head as the leading global reserve/fiat currency. The unilateral sanctions of the West against Russia had the unintended consequence of raising inflation levels in Europe, East Africa and South Asia, which were the largest importers of Russian wheat and energy. Given that seeking alternatives and establishing substitute supply chains takes time and capital, most economies are establishing different mechanisms to circumvent the sanctions. These range from using barter trade to trading in their own currencies over the dollar.
The latter is igniting a debate on the use of the dollar for global trade. Not necessarily among America’s steadfast allies but more so with countries that are on the fence about America’s global interventions. Countries such as Brazil, China, South Africa and India that are part of the BRICS grouping make up more than 24 percent of world gross domestic product (GDP) and 16 percent of world trade. Similarly, in Africa, which makes up 3 percent of global GDP and is predicted to grow six times in size by 2050, many countries will likely reconsider dollar trade…”