As the US Federal Reserve cashes in on their rate hikes, countries around the world are taking up measures to break away from the US dollar. The BRICS coalition, consisting of China and Russia, along with 41 other nations have begun taking steps to divorce themselves from the US dollar and look for new currencies for trade settlements. The partnership between investment guru Matthew Piepenburg and Matterhorn Asset Management have recently discussed this in an interview at the Deutsche Goldmesse conference.
We have begun to observe an alarming trend of weaponizing the dollar- from taking Russia off from STR and SWIFT to freezing their FX reserves. In other words, the US dollar is increasingly becoming more of a gut punch for other countries- which is why they’re now taking the initiative to reduce the overhead costs caused because of it.
However, according to Piepenburg, we do not expect to see the yuan or any other currency replacing the US dollar anytime soon. But we can expect to see a continuous movement of countries switching away from the US dollar as the main, trusted medium of trade. The investor also claims that this transition is “irrevocable”- showing us the willingness of these nations to find an alternate to the almighty US dollar.
The increasing rate of independence from USD can also be seen in the way countries are utilizing the establishment of a digital yuan for facilitating more direct forms of payments as opposed to using USD. In addition to cutting down costs, this shift can also reduce transaction time, making the whole system of global payments more efficient than ever before.
It is true that regardless of the possible movement away from the USD, it will still most likely take a long while for it to be completely replaced by another world reserve currency. That being said, the ever-changing international political environment could possibly expedite or delay the process. It is evident, however, that other countries are set to break away from the US dollar's long-held control.
Robert Ward
- 2023-05-15
The Global Movement Away From the US Dollar
As the US Federal Reserve cashes in on rate hikes, countries around the world, including the BRICS coalition, have begun taking steps to divorce themselves from the US dollar. This article dives into the ongoing movement of nations leaving the US dollar for alternate global payment solutions.
