Web Trader MT5
De-dollarization is a slow but steady process of countries reducing dependence on the US dollar in international trade, reserves, and financial activities. The dollar has been the world’s primary reserve currency since the Bretton Woods agreement following the Second World War.
The US, as the world’s leading reserve currency, has immense economic and geopolitical leverage, including the power to impose sanctions, influence global borrowing costs, and run enormous deficits that other countries could not sustain.
De-dollarization is the fight to end such hegemony. It is reflected in the diversification of reserves, in the purchase and sale of euros, gold, or yuan by central banks, in bilateral trade agreements settled in local currencies, and in the creation of alternative payment systems that do not depend on dollar-based infrastructure such as SWIFT.
Progress has been slower than its advocates seem to think, partly because the dollar’s dominance is self-perpetuating: it is the most liquid, most trusted, most generally acknowledged currency. These are tough traits to imitate fast.
Example: After the West sanctioned Russia in 2022 and froze its dollar reserves, various countries rushed to examine the possibility of settling trade in currencies other than the dollar. China and Russia began to increase bilateral trade in yuan and rubles. A small alteration, but representative of a decades-long process.
