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Is the U.S. Dollar’s Global Dominance Waning?

Global Shifts: The Erosion of the US Dollar's International Dominance?

by udian
August 18, 2023
in Business
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Is the U.S. Dollar's Global Dominance Waning?

Is the U.S. Dollar's Global Dominance Waning?

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The U.S. dollar has held a dominant position in global trade for years. That position is scrutinized as countries consider alternatives, mainly due to recent U.S. actions. We are in a transitioning phase towards a more multipolar world. Increasingly, governments are trading in their local currencies.

Evidence suggests that there could be a shift away from the USD as a global reserve currency in the next three years. Various factors, such as economic sanctions and international politics, have influenced this shift. For instance, the U.S. has been known to employ sanctions as an economic weapon, raising hesitations among other nations.

The impact of these sanctions has been drastic on many economies worldwide. The seeming weaponization of the USD has led countries to seek other means of economic exchange. This situation could result in countries conducting bilateral trade in their national currencies.

The potential erosion of trust in the U.S. currency has been amplified by printing 21% of all U.S. dollars during COVID. Policies in the Middle East and Asia have further alienated the U.S.

The primary concern is that the end of the dollar’s dominance may not happen immediately, but the effects are becoming apparent. However, will this be to the detriment or benefit of the average person saving and working hard? That remains to be seen.

On the other hand, the formation of BRICS (Brazil, Russia, India, China, and South Africa) and their plan to back their currency with gold and other earth metals could also pose a threat. Interestingly, the U.S. has the most gold reserves compared to the following five countries combined.

While the potential loss of USD’s dominance has caused concern, it is vital to note that currencies have risen and fallen in the past. Economies adapt, and change is inevitable. In the end, the USD may face challenges, but its current position remains strong.

Tags: U.S. dollar
udian

udian

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