The move towards de-dollarizing

The US dollar has ruled global reserves for more than 80 years. That’s partially why it became a mainstay for a Zimbabwe-in-crisis. But several countries are trying to distance themselves from the currency to free themselves from ties to the US economy and financial system. Russia has promoted de-dollarization since the annexation of Crimea in 2014 led to sanctions. In light of the Ukraine war, the attempt has accelerated. This year, though, the calls for de-dollarization have grown louder and spread wider.


Brazil and Argentina have been weighing a common currency to reduce reliance on the US dollar in trade. India and Malaysia have agreed to trade in the Indian rupee. China and Brazil reached an agreement to settle trades in each others’ currencies. There’s chatter about Saudi Arabia, Iran, and Venezuela, agreeing to do select trades in Chinese yuan, too.

But breaking America’s currency dominance won’t be easy. The US dollar is inherently built for modern trade, given its structural strength, relative stability, the breadth and depth of dollar-denominated asset markets, and the continued reliance of developing nations on the US dollar inside their supply chains and asset bases. A switch, if at all, would take decades, even generations, economist Peter C. Earle wrote for the American Institute for Economic Research.


Related stories

🤑 The US dollar is king as Zimbabwe’s currency woes prevail

📱 Zimbabwe cracks down on mobile money to discourage US dollar uptake

😕 The Zimbabwean dollar makes a return a decade later but uncertainty reigns

📬 Sign up for the Daily Brief

Our free, fast, and fun briefing on the global economy, delivered every weekday morning.