Dedollarization typically refers to the geopolitical process of substituting the US dollar for other currencies in strategic areas such as commodity pricing, foreign exchange reserves, bilateral trade agreements, etc.
Since 1944, the US dollar, then backed by gold reserves, has been the primary global reserve asset. In 1971 the US dollars' gold backing was suspended permanently, which thus ushered in a historically unprecedented situation where the global reserve asset is backed by nothing. (this is called a "fiat" currency)
Geopolitical importance
Some speculate that part of the reason for the imperialist destruction Libya was because Gaddafi sought to sell Libyan oil for gold and establish a "Gold Dinar" pan-African currency.[1]
This has been likened to the earlier US attack on Iraq, who just years prior had switched its oil prices from dollars to Euros.[1]
In 2017, Venezuela was sanctioned after dropping the US dollar.[2]
In 2021, Russia, China, and the EU are all increasingly interested in reducing their reliance on dollars in their trade.[3]
References
- ↑ 1.0 1.1 "Gaddafi gold-for-oil, dollar-doom plans behind Libya 'mission'?" (2011-05-05).
- ↑ Whitney Webb. "Venezuela Accused Of Drug Trafficking After Dropping U.S. Petrodollar"
- ↑ Divyanshu Jindal (2021-09-18). "Russia, China and EU are pushing towards de-dollarization: Will India follow?" Modern Diplomacy.