Sputnik: US experts says the global economy is moving towards de-dollarization

US experts assessed the prospects for the Chinese yuan as a currency for international settlements and the reasons for ending the dominance of the dollar in the global economy.

Ali Ahmadi, a researcher at the Geneva Center for Security Policy, said that US sanctions policy may be the reason for moving away from the US dollar, pointing out that many countries are looking for convenient and affordable payment methods through other currencies in light of the policy pursued by Washington.

He noted, that De-dollarization will be a difficult process given that the world has had a single currency for a long time as a common medium of exchange.

The yuan is a good option, but the biggest interest in it comes from direct trade with China.

The main problem here is that China’s capital controls make the yuan less convertible or predictable than the US dollar.

The countries of the world are engaging in various projects to reduce their dependence on the dollar, which is likely to bear fruit in the form of increased use of other currencies.

In turn, Thomas Holt, Professor of Marketing and International Business at Michigan State University revealed that the reasons for de-dollarization of the global economy can be attributed to the uncertainty resulting from the conflict in Ukraine, and European interests related to its currency.

In addition to Brazil and China agreeing to use the yuan in cross-border transactions.

He added, “Beijing has been strategically attacking world dollarization for years through the People’s Bank of China and global strategic partnerships with Russia and Brazil, while at the same time paving the way for the European Union with France; For example, by completing the first liquefied gas deal in Chinese yuan.

For his part, Robert Atkinson, head of the Information Technology and Innovation Fund, said: “The dominance of the dollar is slowly declining, and investors are losing confidence in the ability of the US government to repay debt”.

Atkinson noted that the de-dollarization of the global economy would have a mixed effect.

“On the one hand it will reduce the power of the US government, since the US dollar is a reserve currency, and other countries will be less dependent on the US dollar.

On the other hand, de-dollarization means that the value of the US dollar will fall from its artificially high level, which will make US exports more competitive and reduce the current annual trade deficit of $1 trillion, which is crucial if the United States wants to compete effectively with China in many countries of the advanced industries.

Derek Scissors, a researcher at the American Enterprise Institute, said that according to the International Monetary Fund, the US dollar’s ​​share in official foreign exchange reserves has declined over the past decade to 58% at the end of 2022, and this trend continues.

The former US advisor to the US Treasury Secretary, Monica Crowley, warned earlier that if OPEC countries such as Saudi Arabia decide to sell oil in other currencies, this will mean the collapse of the US economic system and the occurrence of a major disaster.

On March 29, Brazil decided to deal in yuan in its trade with China, which amounts to about $150 billion annually.

Chinese Xinhua news agency revealed that the yuan has become the second largest reserve currency in Brazil, surpassing the Euro.