The offensive against the dominance of the dollar has gained strength in recent times. Over the years, the end of the dollar as the international hegemonic currency has been repeatedly announced, but so far it has never materialized. However, this time things could be different. The dollar has been the foundation of the global financial and trading system since the Bretton Woods agreements in 1944, but more and more countries, especially dictatorships and emerging economies, are beginning to fear the consequences of relying heavily on this currency.
The sanctions imposed on Russia and the freezing of its assets in the United States and Europe have highlighted the threat that the dollar represents to authoritarian regimes. In addition, emerging economies fear the possible consequences of US Federal Reserve policies, such as rapidly increasing interest rates, since many of these economies use the dollar to set their export prices and finance themselves.
In this context, an offensive has been launched to overcome the dominance of the dollar. The Chinese yuan, also known as the "joan", has gained prominence and is increasingly being used in international trade. Russia has started using the yuan to get around Western sanctions, and Russian companies are paying for most of their Chinese imports in yuan. In addition, China and Brazil have announced plans to operate with their own currencies and to sideline the dollar in their trade.
Other countries such as Saudi Arabia, Bangladesh, India, Argentina, Pakistan, Iraq, and Bolivia are also looking for opportunities to trade and trade directly in yuan with China. Even international companies like Total, a French oil company, have completed yuan transactions with Chinese partners. Although the dollar's dominance remains overwhelming, the yuan's market share is growing and is expected to continue to increase in the coming years.
However, despite these advances, the dollar remains the world's dominant currency. The amount of international reserves in dollars is much higher than ever before, and the main currencies that have gained market share against the dollar are those that maintain exchange lines with the US Federal Reserve. Furthermore, the yuan represents only a small proportion of international payments channeled through the Swift system.
Although the yuan's market share is likely to continue to grow, it is unlikely to completely unseat the dollar anytime soon. The dominance of the dollar remains overwhelming and the international financial institutions still rely on it. However, increasing competition from the yuan and other currencies could lead to a more multipolar monetary system in the future.
In addition to the Chinese yuan, other currencies such as the euro, the Japanese yen, and the British pound also play an important role in the global financial system and are gaining relevance in certain contexts. These currencies are used in commercial agreements and as alternatives to the dollar in international financial transactions.
Additionally, other alternatives to the traditional monetary system are being explored, such as the use of cryptocurrencies and blockchain technologies in international transactions. These innovations could have an impact on the financial system and challenge the dominance of the dollar in the future, although their wide-scale adoption is still under development and presents regulatory and security challenges.
In summary, although the offensive against the dominance of the dollar has gained strength in recent years, the dollar continues to be the international hegemonic currency. Although there are efforts to diversify the financial system and reduce dependence on the dollar, its dominance currently remains strong due to various economic and political factors. However, the global financial landscape is constantly evolving and we may see changes in the future as other emerging currencies and technologies gain traction. If you liked this post, don't forget to like and share it.