De-dollarization: Difference between revisions

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Since the establishment of Bretton Woods system in 1944, the US dollar has been used as the medium for international trade. In recent years, several countries are transitioning to trade in national currencies.<ref>{{News citation|journalist=Helmut Reisen|date=2009-06-20|title=Shifting wealth: Is the US dollar Empire falling?|url=https://voxeu.org/article/next-global-reserve-currency|newspaper=Vox EU CEPR}}</ref>
Since the establishment of Bretton Woods system in 1944, the US dollar has been used as the medium for international trade. In recent years, several countries are transitioning to trade in national currencies.<ref>{{News citation|journalist=Helmut Reisen|date=2009-06-20|title=Shifting wealth: Is the US dollar Empire falling?|url=https://voxeu.org/article/next-global-reserve-currency|newspaper=Vox EU CEPR}}</ref>


== Notable examples ==
== History ==


=== Iraq's use of Euro ===
=== 2000s ===
In October of 2000, Iraq announced it would price its oil sales in the Euro, moving away from the US dollar which [[Saddam Hussein|Saddam]] described as "the currency of the enemy"<ref>{{News citation|date=2000-10-30|title=U.N. to let Iraq sell oil for euros, not dollars|url=https://www.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/|newspaper=CNN}}</ref><ref>{{News citation|title=Iraq nets handsome profit by dumping dollar for euro|url=https://www.theguardian.com/business/2003/feb/16/iraq.theeuro|newspaper=The Guardian}}</ref> Iraq was invaded by the USA three years later, in 2003, after which time the oil markets were reverted to being priced in USD.
In October of 2000, Iraq announced it would price its oil sales in the Euro, moving away from the US dollar which [[Saddam Hussein|Saddam]] described as "the currency of the enemy"<ref>{{News citation|date=2000-10-30|title=U.N. to let Iraq sell oil for euros, not dollars|url=https://www.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/|newspaper=CNN}}</ref><ref>{{News citation|title=Iraq nets handsome profit by dumping dollar for euro|url=https://www.theguardian.com/business/2003/feb/16/iraq.theeuro|newspaper=The Guardian}}</ref> Iraq was invaded by the USA three years later, in 2003, after which time the oil markets were reverted to being priced in USD.


=== African Gold Dinar ===
In 2009, [[Muammar Gaddafi]], leader of [[Libya]] and President of the [[African Union]] at the time, suggested to the States of the African continent to switch to a new currency, independent of the American dollar: the gold dinar.<ref>{{News citation|date=2019-05-03|title=Gold Dinar: the Real Reason Behind Gaddafi’s Murder|url=https://millenium-state.com/blog/2019/05/03/the-dinar-gold-the-real-reason-for-gaddafis-murder/}}</ref><ref>{{News citation|date=2020-06-29|title=How Muammar Gaddafi’s Vision for a Debt-Free Africa Led to His Death|url=https://www.africanexponent.com/post/7633-150b-reserves-and-0-debt-gaddafis-vision-for-a-debt-free-africa}}</ref> Two years later in 2011, Libya was invaded by NATO, and Gaddafi was killed.  
In 2009, [[Muammar Gaddafi]], leader of [[Libya]] and President of the [[African Union]] at the time, suggested to the States of the African continent to switch to a new currency, independent of the American dollar: the gold dinar.<ref>{{News citation|date=2019-05-03|title=Gold Dinar: the Real Reason Behind Gaddafi’s Murder|url=https://millenium-state.com/blog/2019/05/03/the-dinar-gold-the-real-reason-for-gaddafis-murder/}}</ref><ref>{{News citation|date=2020-06-29|title=How Muammar Gaddafi’s Vision for a Debt-Free Africa Led to His Death|url=https://www.africanexponent.com/post/7633-150b-reserves-and-0-debt-gaddafis-vision-for-a-debt-free-africa}}</ref> Two years later in 2011, Libya was invaded by NATO, and Gaddafi was killed.  


=== Central Banks buying gold ===
=== 2010s ===
Russia and China's central banks are among the largest buyers of gold in the late 2010s and into the 2020s. This shows a clear preference for accumulating hard assets as the perception of dollar-weakness (and US weakness) grows.<ref>{{News citation|journalist=Valuewalk|date=2020-11-27|title=Central Banks To Keep Buying Gold, Drive The Price|url=https://finance.yahoo.com/news/central-banks-keep-buying-gold-195134503.html?guccounter=1&guce_referrer=aHR0cHM6Ly9lbi5wcm9sZXdpa2kub3JnLw&guce_referrer_sig=AQAAABMl7O5QIsqLMwpLDNWIgWZFYH2U1-v58wS6ZQGM2dfERCRHY8yML3HQ4LdHPiG8pTR_1aS3qsZMDN5M6FnDlt1emY-4zh1JYad0ZjBye3GBlViHAmjwtsJV-_EriWen-vxYvcJo9GoWJQ6OBvK0NqAQjIH_4I4VDgdzx9X87V5F|newspaper=Yahoo Finance}}</ref>
Russia and China's central banks are among the largest buyers of gold in the late 2010s and into the 2020s. This shows a clear preference for accumulating hard assets as the perception of dollar-weakness (and US weakness) grows.<ref>{{News citation|journalist=Valuewalk|date=2020-11-27|title=Central Banks To Keep Buying Gold, Drive The Price|url=https://finance.yahoo.com/news/central-banks-keep-buying-gold-195134503.html?guccounter=1&guce_referrer=aHR0cHM6Ly9lbi5wcm9sZXdpa2kub3JnLw&guce_referrer_sig=AQAAABMl7O5QIsqLMwpLDNWIgWZFYH2U1-v58wS6ZQGM2dfERCRHY8yML3HQ4LdHPiG8pTR_1aS3qsZMDN5M6FnDlt1emY-4zh1JYad0ZjBye3GBlViHAmjwtsJV-_EriWen-vxYvcJo9GoWJQ6OBvK0NqAQjIH_4I4VDgdzx9X87V5F|newspaper=Yahoo Finance}}</ref>


=== Censorship of SWIFT system ===
=== 2020s ===
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the digital clearinghouse protocol for international inter-bank USD transactions, all transactions of which are cleared through the New York Federal Reserve Bank. SWIFT has been politicized and used as a financial weapon against states which find themselves in the poor favor of the USA.  
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the digital clearinghouse protocol for international inter-bank USD transactions, all transactions of which are cleared through the New York Federal Reserve Bank. SWIFT has been politicized and used as a financial weapon against states which find themselves in the poor favor of the USA.  


Following the 2022 Russo-Ukrainian conflict, Western nations voiced support for censoring Russia from the SWIFT system.<ref>{{News citation|title=Western nations agree to disconnect Russian banks from SWIFT|url=https://tass.com/economy/1412191|newspaper=TASS}}</ref>
=== Other examples ===
In 2017, Venezuela was sanctioned after dropping the US dollar.<ref>{{News citation|journalist=Whitney Webb|date=|title=Venezuela Accused Of Drug Trafficking After Dropping U.S. Petrodollar|url=https://www.mintpressnews.com/venezuela-drug-trafficking-petrodollar/232056/|newspaper=|archive-url=|archive-date=|retrieved=|quote=}}</ref>
In 2017, Venezuela was sanctioned after dropping the US dollar.<ref>{{News citation|journalist=Whitney Webb|date=|title=Venezuela Accused Of Drug Trafficking After Dropping U.S. Petrodollar|url=https://www.mintpressnews.com/venezuela-drug-trafficking-petrodollar/232056/|newspaper=|archive-url=|archive-date=|retrieved=|quote=}}</ref>


In 2021, Russia, China, and the EU are all increasingly interested in reducing their reliance on dollars in their trade.<ref>{{News citation|journalist=Divyanshu Jindal|date=2021-09-18|title=Russia, China and EU are pushing towards de-dollarization: Will India follow?|url=https://moderndiplomacy.eu/2021/09/18/russia-china-and-eu-are-pushing-towards-de-dollarization-will-india-follow/|newspaper=Modern Diplomacy|archive-url=|archive-date=|retrieved=|quote=}}</ref><ref>{{News citation|date=2021-07-23|title=De-Dollarization Efforts in China and Russia|url=https://crsreports.congress.gov/product/pdf/IF/IF11885|newspaper=Congressional Research Service}}</ref>This comes after the US threatened to suspend Russia's participation in the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system for political reasons.<ref>{{News citation|journalist=|date=|title=Biden Threatens to Cut Russia Off From SWIFT Payment Over ‘Aggression’ Against Ukraine|url=https://21stcenturywire.com/2021/12/07/biden-threatens-to-cut-russia-off-from-swift-payment-aggression-against-ukraine/|newspaper=|archive-url=|archive-date=|retrieved=|quote=}}</ref>
In 2021, Russia, China, and the EU are all increasingly interested in reducing their reliance on dollars in their trade.<ref>{{News citation|journalist=Divyanshu Jindal|date=2021-09-18|title=Russia, China and EU are pushing towards de-dollarization: Will India follow?|url=https://moderndiplomacy.eu/2021/09/18/russia-china-and-eu-are-pushing-towards-de-dollarization-will-india-follow/|newspaper=Modern Diplomacy|archive-url=|archive-date=|retrieved=|quote=}}</ref><ref>{{News citation|date=2021-07-23|title=De-Dollarization Efforts in China and Russia|url=https://crsreports.congress.gov/product/pdf/IF/IF11885|newspaper=Congressional Research Service}}</ref>This comes after the US threatened to suspend Russia's participation in the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system for political reasons.<ref>{{News citation|journalist=|date=|title=Biden Threatens to Cut Russia Off From SWIFT Payment Over ‘Aggression’ Against Ukraine|url=https://21stcenturywire.com/2021/12/07/biden-threatens-to-cut-russia-off-from-swift-payment-aggression-against-ukraine/|newspaper=|archive-url=|archive-date=|retrieved=|quote=}}</ref>
Following the [[2022 Russo-Ukranian conflict|2022 Russo-Ukrainian conflict]], Western nations voiced support for censoring Russia from the SWIFT system.<ref>{{News citation|title=Western nations agree to disconnect Russian banks from SWIFT|url=https://tass.com/economy/1412191|newspaper=TASS}}</ref> Weeks later, the Eurasian Economic Unoin (EAEU) and China are confirmed to be working on an "independent international monetary and financial system"<ref>[[Pepe Escobar]] on Twitter: [https://twitter.com/RealPepeEscobar/status/1503466633066655744?s=20&t=uVkIQEbqC9jwJkiT367y1w "...On Friday, the Eurasian Economic Union (EAEU) and China decided to design the project for an INDEPENDENT INTERNATIONAL MONETARY AND FINANCIAL system. ..."] ''[https://web.archive.org/web/20220314202238/https://twitter.com/RealPepeEscobar/status/1503466633066655744 (Archived)]''</ref><ref>{{News citation|date=2022-03-14|title=The EAEU and China will develop a project of an international financial system|url=https://kapital.kz/finance/103768/yeaes-i-knr-razrabotayut-proyekt-mezhdunarodnoy-finsistemy.html|newspaper=Kapital.kz}}</ref>


== More reading ==
== More reading ==

Revision as of 04:24, 15 March 2022

De-dollarization is the transition away from usage of the US dollar and towards other currencies. It is a global macroeconomic trend with geopolitical ramifications, illustrating the decline of US imperial hegemony and the rise of multi-polarity on the world stage.[1]

Below are some specific situations where dollars might be substituted for other currencies:

  • Trading oil and / or other commodities (Petrodollar)
  • Holding as a reserve asset to ensure central bank capitalization in the form of foreign exchange (forex) reserves
  • Bilateral trade agreements
  • Dollar-denominated assets

Since the establishment of Bretton Woods system in 1944, the US dollar has been used as the medium for international trade. In recent years, several countries are transitioning to trade in national currencies.[2]

History

2000s

In October of 2000, Iraq announced it would price its oil sales in the Euro, moving away from the US dollar which Saddam described as "the currency of the enemy"[3][4] Iraq was invaded by the USA three years later, in 2003, after which time the oil markets were reverted to being priced in USD.

In 2009, Muammar Gaddafi, leader of Libya and President of the African Union at the time, suggested to the States of the African continent to switch to a new currency, independent of the American dollar: the gold dinar.[5][6] Two years later in 2011, Libya was invaded by NATO, and Gaddafi was killed.

2010s

Russia and China's central banks are among the largest buyers of gold in the late 2010s and into the 2020s. This shows a clear preference for accumulating hard assets as the perception of dollar-weakness (and US weakness) grows.[7]

2020s

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the digital clearinghouse protocol for international inter-bank USD transactions, all transactions of which are cleared through the New York Federal Reserve Bank. SWIFT has been politicized and used as a financial weapon against states which find themselves in the poor favor of the USA.

In 2017, Venezuela was sanctioned after dropping the US dollar.[8]

In 2021, Russia, China, and the EU are all increasingly interested in reducing their reliance on dollars in their trade.[9][10]This comes after the US threatened to suspend Russia's participation in the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system for political reasons.[11]

Following the 2022 Russo-Ukrainian conflict, Western nations voiced support for censoring Russia from the SWIFT system.[12] Weeks later, the Eurasian Economic Unoin (EAEU) and China are confirmed to be working on an "independent international monetary and financial system"[13][14]

More reading

  • De-dollarization: The revolt against the dollar and the rise of a new financial world order[15]

References

  1. ↑ Gal Luft (2018-08-28). "The anti-dollar awakening could be ruder and sooner than most economists predict" CNBC.
  2. ↑ Helmut Reisen (2009-06-20). "Shifting wealth: Is the US dollar Empire falling?" Vox EU CEPR.
  3. ↑ "U.N. to let Iraq sell oil for euros, not dollars" (2000-10-30). CNN.
  4. ↑ "Iraq nets handsome profit by dumping dollar for euro". The Guardian.
  5. ↑ "Gold Dinar: the Real Reason Behind Gaddafi’s Murder" (2019-05-03).
  6. ↑ "How Muammar Gaddafi’s Vision for a Debt-Free Africa Led to His Death" (2020-06-29).
  7. ↑ Valuewalk (2020-11-27). "Central Banks To Keep Buying Gold, Drive The Price" Yahoo Finance.
  8. ↑ Whitney Webb. "Venezuela Accused Of Drug Trafficking After Dropping U.S. Petrodollar"
  9. ↑ Divyanshu Jindal (2021-09-18). "Russia, China and EU are pushing towards de-dollarization: Will India follow?" Modern Diplomacy.
  10. ↑ "De-Dollarization Efforts in China and Russia" (2021-07-23). Congressional Research Service.
  11. ↑ "Biden Threatens to Cut Russia Off From SWIFT Payment Over ‘Aggression’ Against Ukraine".
  12. ↑ "Western nations agree to disconnect Russian banks from SWIFT". TASS.
  13. ↑ Pepe Escobar on Twitter: "...On Friday, the Eurasian Economic Union (EAEU) and China decided to design the project for an INDEPENDENT INTERNATIONAL MONETARY AND FINANCIAL system. ..." (Archived)
  14. ↑ "The EAEU and China will develop a project of an international financial system" (2022-03-14). Kapital.kz.
  15. ↑ Gal Luft (2019). De-dollarization: The revolt against the dollar and the rise of a new financial world order.
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