On the morning of April 13, Brazilian President Lula came to the headquarters of the BRICS New Development Bank in Shanghai to attend the inauguration ceremony of new President Rousseff。

In his speech, Lula said, "When I was President of Brazil (2003-2010), I was very honored to have participated in many summits of the Group of 20 (G20) and other organizations, and also held many closed-door meetings with Russia, India, China and South Africa.。That's when we wanted to set up our own development bank.。Every night I think about the question, why do all countries have to settle in dollars?？Why can't the RMB or other currencies become the international settlement currency?？"

One stone stirs up a thousand waves, and the topic of "de-dollarization" is back in sight again。

 

Crimea crisis sequelae "pioneer" Russia took the lead in raising the "de-dollarization" flag

The "pioneer" of de-dollarization is actually Russia。

Long after the Crimea crisis in 2014, the West imposed long-term, multifaceted sanctions on Russia.。During this period, Russia realized the "invisible" control of the dollar over its economic operation and financial markets, and has slowly begun to embark on the path of de-dollarization.。

In 2020, the euro replaced the dollar as the main currency for the settlement of Russian exports to China, and China is Russia's most important trading partner.。In 2021, according to the Russian central bank, the country cut its dollar reserves to just 16 percent of the central bank's total reserves, down from more than 40 percent four years ago.。In addition, at the end of 2021, Russia held only $3.9 billion in U.S. government bonds, down from $176 billion in 2010 and less than 3 percent at the time.。

Efforts to de-dollarize, emerging in Russia-Ukraine conflict。After the full outbreak of the war, the United States and Europe have announced further sanctions against Russia。But Russia's preparations in previous years have effectively weakened the negative impact of Western sanctions.。

After the conflict began, Russia did not forget to continue the process of de-dollarization。

In March 2022, Russian President Vladimir Putin signed a presidential decree stipulating that "unfriendly countries" identified by Russia must open ruble accounts in Russian banks to pay in rubles if they want to buy Russian gas.。At the end of the month, Vyacheslav Vologin, chairman of the Russian State Duma, warned that Russian exports such as grain, fertilizer and timber could soon be priced in rubles.。In July, Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin met in Tehran to formally discuss paying for Russia's energy imports in currencies other than the dollar.。It was also reported at the time that Russia was actively developing financial systems similar to SWIFT, such as the SPFS financial information platform, and had opened special accounts in some banks to try to trade with Asian countries in currencies other than the US dollar.。

In August of the same year, according to the monthly RMB report and statistics released by the Global Banking and Financial Telecommunications Association, Russia has become the world's third largest offshore RMB payment market.。At the end of the year, two sources quoted by foreign media said that if oil and gas revenues meet expectations, Russia will start buying yuan in the foreign exchange market next year, thus opening up a new front in the accelerated de-dollarization process and reducing its dependence on Western finance.。As a result, Russia's de-dollarization process has begun a new phase, and if the previous official discussion was only about payments and settlements between international trade, this time the theme is directly around the future of Russia's potential reserve currency orientation.。

Encouraged by Russia, more and more countries are exploring payment and settlement systems that bypass the dollar。According to the International Monetary Fund, the dollar's share of global foreign exchange reserves fell to its lowest level since 1995 as of the fourth quarter of 2022.。

 

Countries gradually join the de-dollarization army Developing countries gradually take over the banner

In 2023, the process of de-dollarization will intensify and "blossom more" in developing countries.。

In January 2023, Brazil and Argentina announced that they would prepare for the creation of a common currency belonging to the Latin American region and would invite other countries in the region to join them.。

In March, Iran and Saudi Arabia resumed diplomatic relations brokered by China, and there are rumors that Iran, Saudi Arabia and Syria are close to reaching a geopolitical and economic agreement that bypasses the United States.。In addition, a formal meeting of ASEAN finance ministers and central bank governors opened in Indonesia, with the top topic of the meeting discussing how to reduce the dependence of financial transactions on the dollar, euro, yen and pound sterling and move to local currency settlement.。At the end of the month, the Brazilian government said it had reached an agreement with China to no longer use the U.S. dollar as the intermediate currency, but to settle trade in its own currency.。

At the end of March, just as the war between Russia and Ukraine was raging, the International Criminal Court in The Hague issued an arrest warrant against Putin for "illegally taking children out of Ukraine."。Justice ministers from more than 40 countries have gathered in London to discuss and express support for the investigation by the Hague court。Dramatically, as these more than 40 justice ministers travelled to the UK for a meeting, representatives of more than 40 African countries also appeared in Moscow at the same time for the second Russian-African Parliamentary Conference。At the meeting, the participants "tit-for-tat" expressed the need to work together to build a "new multipolar world order."。

In April, Malaysian Prime Minister Anwar proposed the establishment of an Asian Monetary Fund, threatening that Malaysia had no reason to continue to rely on the dollar, and that at least the Asian Monetary Fund should be considered before discussing settlement in each country's local currency.。In addition, Russia has released another bombshell, announcing that it and India have agreed to settle trade in rupees.。It is worth noting that Russia is now India's largest oil supplier, accounting for 35% of the latter's oil imports.。

At the same time, the BRICS countries are discussing the creation of a "BRICS currency," most likely the launch of a digital currency, which is scheduled to be discussed at the BRICS summit in August.。In fact, for the BRICS countries, the idea has a long history.。Sources have pointed out that since 2001, the BRICS countries have been considering the establishment of a political / monetary balance mechanism to counter the hegemony of the United States.。

There is no doubt that Lula's visit to China, which also has the idea of accelerating the process, has once again sent a signal that the BRICS countries are working together to contain the dollar.。

 

What did the dollar do wrong when it was "squeezed out" by countries?？

After a series of events, people can't help but wonder why so many countries are willing to work together to promote the process of de-dollarization, is the United States for decades around the dollar to establish a system of privilege, has ceased to exist?？

The answer, of course, is no, and it turns out that what makes countries miserable may be precisely the excessive privilege of the dollar.。

Ever since the U.S. began using SWIFT to sanction Russia, countries have been concerned that the dollar, and the dollar-centric SWIFT settlement system, will become an open U.S. sanctions tool that can easily isolate a country from the global financial payment system if necessary.。

This is no doubt a sword of Damocles hanging over the heads of nations, and no one can guarantee that this sword will not cut itself at some point in some way.。In today's increasingly complex economic situation, if countries do not have a response plan in place, and if they have a dispute with the United States in some respects, they risk being forced to comply with or enforce sanctions that they may not agree with, and lose trade with their major partners.。

Former U.S. Assistant Secretary of the Treasury Roberts recently said that after World War II, U.S. hegemony has relied on the dollar's status as the global reserve currency, and recent U.S. financial sanctions prove that the dollar is no longer safe。The U.S. International Banker magazine also recently reported that the momentum of de-dollarization around the world may not be so surprising, given that about a quarter of the world's population is directly affected by U.S. financial sanctions.。

On January 10, at a forum held by the Yusov Isa Institute for Southeast Asian Studies, a Singapore think tank, Singapore's former foreign minister, Yang Rongwen, also said that the dollar is a curse on all of us.。If you weaponize the international financial system, there will be more alternatives to replace it, and the dollar will lose its edge。

In addition, the implantable impact of the dollar on the global economy has caused panic in countries。Cui Jianjun, a professor at the School of Economics and Finance at Xi'an Jiaotong University, said that since March last year, the Fed has ended its loose monetary policy and turned to aggressive interest rate hikes, causing turmoil in international financial markets.。Many developing countries suffer from severe inflation and face devaluation of their currencies and capital outflows。Reducing their holdings of US dollar-denominated government bonds and promoting the diversification of foreign exchange reserve assets is actually a helpless self-help move by these countries to cope with the spillover of financial risks in the United States.。

In Asian countries, in particular, a stronger dollar has sharply raised food prices in those countries, increasing their debt service burdens and increasing poverty.。Sri Lanka's economy was hit hard late last year when it defaulted on its dollar debt for the first time as a soaring dollar weakened the country's ability to service its debt。

On March 30, Tesla CEO Musk also pointed out in a tweet that U.S. policies are too tough, making countries want to abandon the dollar.。He then went on to add that the U.S. government is spending too much, forcing other countries to bear a large part of the U.S. inflation.。

Today, the United States earlier through the Bretton Woods system step by step to establish the dollar hegemony, may be because of the dollar's "weaponization" and "implantation" has been long weakened.。American economist John Carney has warned that the dollar may soon lose its "power," the dollar's dominance is weakening.。The US "Business Insider" magazine also published an article saying that the dominance of the US dollar in global trade faces "huge challenges."。

It is too early for the dollar system to collapse currency disputes to accelerate the process of world multipolarization.

Although the de-dollarization process is intensifying, it is too early to think that the dollar is about to end.。

Cui Jianjun said that the current dollar in global trade settlement, central bank foreign exchange reserves, global debt valuation and global capital flows in the proportion is still high.。Although the dollar's position in the global monetary system has continued to decline in recent years, its position as the world's reserve currency is unlikely to be quickly replaced.。"

The U.S. investment agency Carson Group also recently analyzed that the dominance of the U.S. dollar as the world's reserve currency will not change in the short term, especially in the absence of a strong alternative.。

Guo Hongyu, a professor at the School of Finance at the University of International Business and Economics, said that at present, the U.S. dollar still firmly occupies the two cornerstones of oil and gold, and the global market still has a strong path dependence on the U.S. dollar in terms of international trade settlement, cross-border payments and financing.。

In addition, Burras, head of research at K2 Asset Management, a hedge fund with 30 years of market experience, has previously noted that it is very difficult to compete in the fiat currency market, which Russia does by forcing the use of rubles.。But at the end of the day, investors still prefer liquid assets, in the sense that nothing can replace the dollar。

Nevertheless, with the closer economic and trade ties between countries in the wake of the epidemic and the gradual results of earlier cooperation, it is foreseeable that the term de-dollarization will be put on the agenda again and again.。At present, it seems that although this economic behavior is unlikely to lead to a sharp decline in the hegemony of the dollar, it will, to some extent, weaken the centralization of the dollar, reduce the trade burden on countries, promote the process of multilateralization of the world, and may even exacerbate the repricing of non-US currencies and even precious metals.

In other words, the process of "de-dollarization" that we are now witnessing is not necessarily just a matter of trade payments and settlements between countries, but rather an accelerated process of multipolarization of the world political landscape.。