‘De-dollarization’ has begun – a US Economist warns

Washington: ‘The use of the dollar as a weapon by the United States and the changes in monetary policy have ended the position of the US dollar as the sole currency for world trade. Global ‘de-dollarization’ has begun and will continue. The dollar may lose its international credibility slowly or perhaps faster than expected,’ US Economist Peter C. Earle warned. At the same time, Brazilian President Lula da Silva, who is visiting China, has urged the BRICS countries to stop using the US dollar and trade in local currencies.

'de-dollarization', US Economist Due to the sanctions imposed on the Iranian and Russian economies and their resultant consequences, other countries have also started preparing emergency plans regarding the dollar. Although discussions on the issue of an alternative reserve currency have been going on for the past few decades, it has gained more momentum in recent years, Economist Earle underscored. The US economist mentioned in his article the agreement between Brazil and China regarding the use of yuan and rial, the use of local currencies by India and Malaysia, and the use of yuan in energy transactions between China-UAE-France.

Economist Earl brought to notice the facts that many countries are slowly moving away from the dollar due to the US’s use of the dollar as a weapon in economic and trade wars and the wrong decisions made by the US administration concerning the dollar. The US economist claimed that the policies implemented after the recession of 2008-09 due to the financial crisis and the decisions taken after the corona pandemic of 2020 have caused a loss of confidence in the dollar. Although the easy availability of a currency like the dollar is a plus side, its decline cannot be stopped, and the process has already begun, Earle warned.

Even as the US economist is issuing a warning on ‘de-dollarization’, the Brazilian President has openly called for abandoning the use of the dollar. President Lula da Silva, who is visiting China, participated in the BRICS group’s ‘New Development Bank (NDB)’ program. At this time, he asked direct questions such as, ‘Why do all countries still use the dollar for trade?’ and ‘Why are we not transacting in our local currencies instead of dollars?’ He targeted the US and Western countries by asking, ‘Who decided to use the US dollar after the backing of gold was removed?’

‘Today, all countries are running after the dollar for trade exports. Actually, these countries should use their currencies. The BRICS group of banks should develop a currency for trade between China and Brazil and between Brazil and other BRICS countries,’ the Brazilian President suggested. Just last month, Brazil signed an agreement to use China’s yuan currency in trade and financial transactions. Simultaneously, senior Russian officials have also indicated that the BRICS group was developing a new currency.

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