It is only if the US is no longer the world power that there will be DE dollarization. As long as the US is still in power, USD remains the primary reserve funds.
Hi SC,
I think you misunderstood what
de-dollarization means
De-dollarization doesn't mean that the $ is worthless.
De-dollarization doesn't mean that nobody uses the $.
De-dollarization doesn't mean that the $ is not the most used currency.
"De-dollarization describes a process of moving away from the world’s reliance on the U.S. dollar (USD) as the chief reserve currency."De-dollarization describes a process, Sim Card
This process is already taking place, as you can see from this chart
I'm not a friend of Wikipedia, but under De-dollarization they offer a whole
list of instances for de-dollarizationThese instances refer to events of the past, events which have already taken place.
De-dollarization, this process, is not a possible event of the future. It has already started, as you can read below.
Trading oil or other commoditiesArgentinaStarting from early 2023, Argentina plans to join Brazil in paying for Chinese imports using the yuan instead of U.S. dollars. The country's goal is to safeguard its diminishing reserves of U.S. dollars. Argentina has been facing a significant decline in agricultural exports due to a severe drought, resulting in reduced inflow of dollars. In April 2023, Argentina intends to purchase approximately US$1 billion worth of Chinese imports using the yuan. Following that, the country aims to pay around $790 million worth of monthly imports in the Chinese yuan. After China and Argentina declared in April that their swap line had been opened, Argentina was able to utilise the equivalent of 1.04 billion yuan to pay for Chinese imports in May. The line was then increased to $18 billion over the following three years in June, during Massa's visit to China.
BrazilIn late March 2023, China and Brazil finalized an agreement to conduct trade using their respective currencies.
BoliviaIn April 2023, Bolivian President Luis Arce revealed that the government is actively considering the adoption of China's yuan as an alternative to the U.S. dollar for conducting international trade. The decision stems from Bolivia's ongoing challenge of insufficient liquidity in domestic markets, with shortages of U.S. dollars escalating since early 2023, due to the declining net international reserves.
ChinaSince 2011, China is gradually shifting from trade in US dollar and in favour of Chinese yuan, and in March 2018, China started buying oil in gold-backed yuan.
In March 2022, multiple reports claimed that Saudi Arabia was in talks with China about trading Saudi oil and gas to China in Chinese yuan instead of dollars.
In December 2022 at China - GCC Summit, President Xi Jinping called for Oil trade payments to be settled at yuan. Foreign Minister Wang Yi stated that Chinese-Arab relations experienced a "historic improvement."
EuropeImmediately at the start of the War in Ukraine, mostly Western countries imposed heavy sanctions on Russian commodities and banking sector. As a response, on 31 March 2022 Russian president Vladimir Putin signed a decree mandating unfriendly countries from April 1 to pay the natural gas imports in rubles. European leaders have initially rejected paying for deliveries in rubles, marking that such a move would undermine sanctions already imposed on Moscow. In April 2022, four European gas companies made trade payment settlements in rubles.
GhanaOn 24 November 2022, Vice President Mahamudu Bawumia stated that they are working to buy Oil in Gold and he added "The barter of gold for oil represents a major structural change."
IndiaIndia is exploring ways to strengthen its economy by reducing its reliance on the US dollar. The country believes that decreasing demand for the dollar in international trade can help stabilize its national currency, the rupee (₹). India's leaders have taken note of the trend of de-dollarization among other countries and are now seeking to increase trade using their own currency. To achieve this goal, India plans to convert the rupee (₹) into a foreign currency and increase its share of global trade.
IranAs a result of US sanctions, Iran has tried hard to reduce its reliance on the dollar. The country has been seeking alternative ways or methods in order to conduct international trade utilizing diverse currencies such as the Euro. The Islamic Republic of Iran is also striving to apply blockchain technology and digital currencies in order to bypass the international financial system and likewise to reduce the effect of sanctions.
MalaysiaDue to the fluctuations in the dollar in recent years, there are countries like Malaysia that are seeking an appropriate alternative to the dollar in global trade transactions to strengthen their economy. On the other hand, according to Malaysia, the de-dollarization and lower demand of the country in order to apply the dollar in commercial transactions will be able to provide the ground for the stabilization of the ringgit (its local currency). The president of this country mentioned that with the economic power given to Asian countries among China/Japan, there isn’t any reason for Malaysia to remain dependent on the dollar, and on the other hand, the central banks of these two countries (i.e. China and Malaysia) have begun their discussions in regard to the implementation of trade in each other's currencies.[30]
RussiaIn August 2022, Turkey and Russia agreed to use rubles in trade of the natural gas.
In September 2022, Gazprom CEO Alexey Miller said that they have signed an agreement to make trade payments in rubles and yuan instead of US dollars.
In November 2022, Russian Deputy Prime Minister Alexander Novak confirmed that all gas supplied to China via Siberia are settled in rubles and yuan.
On March 23, 2022, Putin signed an order forbidding "non-friendly" countries (including EU countries, United States and Japan) from buying Russian gas in any other currency besides the Russian ruble in the wake of sanctions given in aftermath of 2022 Russian invasion of Ukraine. As of 2022, Russia is the world's biggest gas exporter, making 17% of world gas export.
Saudi ArabiaIn January 2023, Finance Minister of Saudi Arabia Mohammed Al-Jadaan stated that it is open to trade in other currencies besides the US dollar, and this expression is considered to be the first time in 48 years.
TurkeyThe Turkish president has introduced a fresh strategy to decrease dependence on the US dollar in global commerce. The aim is to establish trade without the use of the dollar with Turkey's international trading associates. The president has indicated a willingness to engage in trade with China using local currencies, indicating a shift away from the dollar. Additionally, talks have been held about the possibility of replacing the US dollar with another national currency in transactions with Iran. This choice is motivated by both political and economic factors, as Turkey strives to support its domestic currency by distancing itself from the US dollar.[39]
VenezuelaIn August 2018, Venezuela declared that it would price its oil in euros, yuan, rubles, and other currencies.
Bilateral trade agreementsIndia-RussiaBefore 1991, Soviet Union and India traded in rupee-ruble exchange during Cold War. Mutual trading between India and Russia is done mostly in rubles and rupees instead of dollars and euros. In March 2022, India and Russia entered for a Rupee–Ruble Trade Arrangement.
Australia/Russia/Japan/Brazil/IranIt made agreements with Australia, Russia, Japan, Brazil, and Iran to trade in national currencies. It has been reported that in the first quarter of 2020 the share of the dollar in the bilateral trade between China and Russia fell below 50 percent for the first time. In 2011, Japan made an agreement with China to trade in national currencies. Sino-Japanese trade had a value of US$300 billion.
Brazil-ChinaIn March 2013, during the BRICS summit, Brazil made an agreement with China to trade in Brazilian real and Chinese yuan.
Australia-ChinaIn 2013, Australia made an agreement with China to trade in national currencies.
INSTEXIn 2015, China launched CIPS, a payment system which offers clearing and settlement services for its participants in cross-border Renminbi payments and trade as an alternative to SWIFT. Since the end of 2019, the EU countries established INSTEX, a European special-purpose vehicle (SPV) to facilitate non-USD and non-SWIFT transactions with Iran to avoid breaking U.S. sanctions. On 11 February 2019, Russian deputy foreign minister Sergei Ryabkov stated that Russia would be interested in participating in INSTEX.
Iran-EUIn March 2020, the first Iran-EU INSTEX transaction was concluded. It covered an import of medical equipment to combat the COVID-19 outbreak in Iran. European countries said in March 2023 they had decided to end a scheme put in place in 2019 to allow trade with Iran and protect companies doing business with it from US sanctions, but it was only a single one transaction traded.
Russia-IranIn July 2022, Russia and Iran made modifications in their Bilateral trade to reduce the dependency of US dollar. The new monetary system could mean the debts can be settled in their own countries and could reduce the demand for US dollars by 3 billion a year. In January 2023, Russia and Iran were planning to trade with gold backed cryptocurrencies as an alternative to US dollar.
Southeast AsianA group of Southeast Asian countries in the region, such as Singapore, Malaysia, Indonesia, Cambodia, and Thailand, are currently contemplating the process of de-dollarization in order to diminish their dependence on the US dollar within their economies. These nations have voiced apprehensions regarding the volatility of the dollar's value and the American government's utilization of the dollar embargo mechanism. Consequently, they have developed a keen interest in mitigating their vulnerability to the dollar and exploring alternative currencies.
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