Given the concerns of many countries over America’s hegemony over the global financial system and its ability to use the dollar as a weapon against them, various parties have resorted to testing alternatives to the dollar.
And the “Oilprice” website published a report in which it says that since 1967, many countries have begun to shift their reserves away from the dollar and reduce their dependence on the US financial system.
dollar dominance
The site noted that the United States became the leading financial power after the First World War. As a result, the dollar began to replace the British pound as the international reserve currency, and the United States also became a major buyer of the wartime gold stream.
The report emphasized that the dollar gained a greater role in 1944 when 44 countries signed the “Bretton Woods” agreement, which led to the establishment of a collective international currency exchange system tied to the US dollar tied to the price of gold. .
The report noted that by the end of the sixties European and Japanese exports had become more competitive with American exports, and there was a large supply of dollars worldwide, making it difficult to back the dollar with gold, so President Nixon made a decision. To stop the direct conversion between the US dollar and gold in 1971. This gold standard removed the limit on the amount of currency that could be minted.
Russia and China’s steps towards dedollarization
The report said that many countries’ concerns over America’s dominance of the global financial system and its ability to weaponize it has caused the United States and other countries to test other alternatives to limit the dollar’s dominance. Western countries have imposed economic sanctions on Russia in response to its war against Ukraine, collaborated with Moscow and the Chinese government to reduce reliance on the dollar and establish cooperation between their financial systems.
The author, since the war in 2022; Trade between the ruble and the yuan has increased 80 times, and Russia and Iran are also working together to launch a gold-backed cryptocurrency. In addition, central banks, especially Russia and China, increased their gold purchase rate, which has not been seen since 1967, as countries move away from the dollar and diversify their reserves.
continued dollarization The UAE and India are in talks to move away from the dollar and use the rupee in non-oil commodity trade.
The site concluded the report by saying that despite these moves, many believe that the end of the dollar’s global supremacy will not come anytime soon. Currently, central banks hold about 60% of their foreign exchange reserves in dollars.
Source: websites
