MOSCOW, January 5The epidemic of sanctions has forced many states to think about their dependence on the dollar. What will happen to their accounts and savings if they oppose Western policies and go their own way, abandoning currency bondage? Individual initiatives against the American currency had been put forward before, but in 2023 such voices sounded even louder: as the analysis showed, now every third UN country has decided to rely on the development of national means of payment.
The analysis examined statements by officials from 193 UN countries in international and Russian media; representatives of 68 countries clearly supported de-dollarization or stated that they were taking measures in this direction.
The bravest ones openly call for a fight with the “bucks” directly from the political stands. First of all, these are long-time participants in strong regional associations like ASEAN or BRICS. For example, Brazilian President Luiz Inacio Lula da Silva regularly proposes creating an alternative currency to the dollar for payments within the union. A similar opinion is shared by South African Finance Minister Enoch Godongwana, who advocates enhanced lending in national currencies.
Dedollarization is one of the consequences of increasing fragmentation of the global economy and the transition to a multipolar world, says Maxim Osadchiy, head of the analytical department of BKF Bank. “It intensified due to anti-Russian sanctions, which clearly demonstrated the risks of the national economy’s dependence on the American currency. De-dollarization reduces the demand for the dollar and, as a result, contributes to its devaluation,” the expert concludes.
At the same time, many countries have realized that the dollar is dangerous not only as a means of payment, but also as an instrument of savings, so the concept of de-dollarization makes sense to consider much more broadly. For example, Israel announced that it would reduce the dollar's share of foreign exchange reserves in favor of the yuan. Some countries are making more targeted efforts to reduce their population's dependence on foreign money. Among them is Vietnam, which banned long-term foreign currency deposits.
Creeping dedollarization
Most often, fearless calls to declare war on the American currency come from the lips of top officials and politicians on the African continent and Latin America. Thus, Kenyan President William Ruto asked local leaders to take the first steps towards abandoning it in favor of payments through the pan-African payment system.
Some countries are backing up their overt anti-dollar rhetoric with concrete actions. For example, Ghana is actively exploring the possibility of buying oil with gold instead of the dollar. And the Prime Minister of Laos, Sonexai Siphandon, decided to complicate payments in American currency by signing a multi-page decree requiring mandatory control of such payments.
At the same time, most representatives of the national currency camp prefer to act more cautiously, without directly declaring their payment preferences. At the same time, they are actively applying to join various economic unions that are carrying out de-dollarization. Thus, a number of countries, including Algeria, Bahrain, Ethiopia and many others are interested in membership in BRICS.
Currency alternatives
There are countries that also refrain from making bold statements. At the same time, they organize their calculations in such a way that there is no doubt that dedollarization, as they say, is evident. Among such countries, for example, is Bangladesh, which has completely switched to rupees in trade with India. This currency was also preferred in mutual trade by Mauritius and Sri Lanka. At the same time, the UAE dirham is no less popular in the developing world. For example, Pakistan conducted a number of large grain and oil transactions in this currency last year. And the key driver for this currency is the Emirates themselves, which have switched from using the dollar in oil trading to the local currency.
The ruble is also actively moving around the world. It is of particular interest to countries that work closely with Russia, primarily the EAEU. Armenia, for example, announced a complete refusal to make payments with our country in dollars and euros. At the same time, the absolute king in the world as a whole among alternative currencies to the “American” is the Chinese yuan: for almost the entire past year, the SWIFT interbank system, through which the majority of all global payments pass, reported its dizzying successes.
At the end of November, the share of settlements in yuan through this system reached its historical maximum of 4.61% — the Chinese currency for the first time managed to move up the Japanese yen in the ranking of the most popular means of payment. In general, China is doing a lot to popularize its unit of account. For example, special settlement centers have opened in Hong Kong, Singapore and Europe to facilitate payments in yuan, and the country is also actively establishing contacts with foreign exchanges, while being one of the countries developing a national digital currency — this is also one of the ways to reduce settlement slavery .
Despite the efforts to de-dollarize countries around the world, the dollar continues to maintain leadership in the ranking of popular settlement currencies. According to SWIFT, at the end of November it accounted for more than 47% of all settlements through this system. US President Joe Biden is trying to support the national currency with verbal interventions, having expressed confidence in the inviolability of the dollar’s position in response to reports of agreements between Brazil and China to abandon this currency in mutual trade. Time will tell whether the dollar will be able to maintain hegemony.