The United States dollar has ruled the financial world for nearly eight decades since the end of World War II. Now, another war is setting the stage for many countries to explore a move away from
Russia’s invasion of Ukraine in February 2022 triggered a wave of US-led financial sanctions against Moscow. The two most powerful among them have been the decision by Western governments to freeze nearly half ($300bn) of Russia’s foreign currency reserves and the removal of major Russian banks from SWIFT, an interbank messaging service that facilitates international payments.
These sanctions, which some have called the “weaponisation” of the dollar, have predictably made Russia and China, the two biggest geopolitical rivals of the US, promote their alternative financial infrastructures.
But it isn’t just Beijing and Moscow. From India to Argentina, Brazil to South Africa and the Middle East to Southeast Asia, nations and regions have accelerated efforts in recent months towards arrangements aimed at reducing their dependence on the dollar. At the heart of these de-dollarisation initiatives is the fear in many capitals that the US could someday use the power of its currency to target them the way it has sanctioned Russia, according to political economists and sanctions experts.
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So can these moves actually dethrone the currency, often referred to as “King Dollar” in financial circles, from its perch as the top dog in global trade?
the dollar for trade, raising questions over the currency’s future dominance.