Russia and China Increase Efforts to Reduce Reliance on Dollar Amid U.S. Sanctions
Russia and China are working together to reduce their reliance on the US dollar and to establish cooperation between their financial systems. The two countries are concerned about America's dominance over the global financial system and its ability to use it as a weapon. In response to the economic sanctions imposed by the US and other Western countries after Russia's invasion of Ukraine in 2022, the ruble-yuan trade has increased by eighty-fold. Russia and Iran are also reportedly collaborating to launch a gold-backed cryptocurrency, and central banks of various countries, especially Russia and China, have been buying gold at a rapid pace to diversify their reserves away from the dollar.
De-dollarization is becoming a trend in other parts of the world as well. Brazil and Argentina have been discussing the creation of a common currency for the two largest economies in South America. In Singapore, former Southeast Asian officials spoke about de-dollarization efforts underway. The UAE and India are in talks to use rupees to trade non-oil commodities, shifting away from the dollar. Additionally, Saudi Arabia has expressed its willingness to trade in currencies other than the US dollar for the first time in 48 years. Despite these movements, experts predict that the dollar's global sovereign status is unlikely to end anytime soon, as central banks still hold about 60% of their foreign exchange reserves in dollars.
It's interesting that Russia and Iran are pursuing a gold-backed cryptocurrency. A system like that sounds like a new age gold standard, which would be interesting to see since the U.S. abandoned the original gold standard about half a century ago under Nixon. I'm not surprised that many semi-periphery countries are pursuing new economic alliances as well with the postmodern geopolitical situation being the way it is (the U.S.'s slow war on terror, COVID's impact on the economy etc.). I do wonder if successful switches away from the USD would elevate many of these nations and put the world in more of a multipolar situation. Good post!
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