The entire developing world is showing interest in de-dollarization and aims to sidestep the US dollar. From trading in local currencies to rewriting deals that benefit their economy and diversifying their central bank reserves with gold, emerging nations are looking beyond the USD for settlements.
So why do they want to de-dollarize their economy? What’s the main catalyst that drew them towards the new agenda? In this article, we will explain why many countries in the developing world are aiding de-dollarization.
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De-Dollarization: But Why?
The foreign policy of the White House is the main catalyst that drew developing countries towards de-dollarization. The US imposing sanctions on other countries and the weaponization of the US dollar are among the reasons why emerging economies find de-dollarization lucrative.
Russia’s $300 billion in reserves were frozen by the US, which alarmed several developing countries. They now believe that the White House is wielding way too much power beyond its stronghold. Economic sovereignty is being misused and weaponized according to the whims and fancies of the US.
‘How can the US freeze any country’s reserves overnight?‘ is the million-dollar question now. Nobody gave them the right to do so; therefore, other countries are jumping on the de-dollarization bandwagon to take on the US hegemony.
In addition, their respective economies are exposed to the US debt if they solely depend on the dollar. The National debt has already crossed the $38 trillion mark and is showing no signs of slowing down. While the US is trying to import its debt, other countries are thinking twice before using it. Moreover, the introduction of digital currencies has made it easier to initiate de-dollarization.
The majority of countries are also testing Central Bank Digital Currency (CBDC) and could be the next big thing to disrupt the market and keep de-dollarization on a bigger platform. In conclusion, all of these are the reasons why the world wants to de-dollarize.
