A lot of very good points here, so thought I might add my two cents as well.
-USD and EUR are still means of economic dominance not just through sanctions, but also by giving western systems significant ability to use the purchasing powers of their currencies to influence policymakers, and wherever necessary - even topple governments and install puppets. This is in addition to their ability to fund their large war machinery.
- Therefore, it is in the interest of most of the non-western world to de-dollarize, if they want to have a less unfair world.
- US government's reckless spending is adding to pressures on the USD. The only way out for the US is either to sharply improve US productivity , or to export inflation to the world by importing goods and services using their printed dollars. It is the latter that is threatened by proposals to shift to alternatives.
- Such shifts takes decades in general. The last shift from GPB to USD took decades as well, and was ultimately cemented due to the US becoming the de-facto top dog after WW2.
- That said, the dollar faces real risks of a sharper transition, as US public debt of nearly USD 38 trillion is quickly starting to compound faster due to higher interest rates, alongside uncontrolled government spending by US. This means more reckless dollar printing. US authorities have not yet acted to fix the structural issues driving it.
A good post except for this bit..
- In case pressures on the USD or EUR build up, I feel there's reason to worry that the collective west will use any means necessary, including wars, to defend their currencies,
When have they done that? And how would a war achieve that goal?
There is a running battle I have with Indian commentators. They look at the world in geoeconomic terms whereas the world as I can see operates on security.
Why go to war? To have a better peace.
Essentially to address a security imbalance because without everything else becomes untenable. Including economy. Four examples from this century alone. Afghanistan, Iraq, Ukraine & Gaza. If you want a local example think of AFSPA. No way for the state to function otherwise. Without which there is no freedom, rights or justice in disturbed areas. None of these are a given and can only flourish if security is available.
So financial security isn't an argument. Decades of financial sanctions on NK hasn't resulted in them going to war because to date these sanctions have not succeeded in overthrowing the Kim's.
But if you threaten them with an invasion NK will set the south alight. They can do a lot of damage.
Physical insecurity threatens much more directly and becomes an imperative.
and while EUR is a competitor in theory, I do not subscribe with that view in practice, given the (usually) close coordination between US Fed and ECB on currency, interest rates, and bond markets.
Agreed, ECB can't print euros the way the Fed can print dollars. Euro was touted as a competitor at its introduction but two decades later we see how far it can go and unlikely to go further given the EU's weakening in power relative to the US since. Evident with their negligible opposition to an avoidable and US instigated conflict in their backyard.
Read this JP Morgan article
Is de-dollarization imminent? What would be its impact on the global economy and markets? Find out more from J.P. Morgan Research.
www.jpmorgan.com
More news in wikipedia
en.wikipedia.org
Reason I think this topic is a load of bunk is NONE of the BRICS currencies is fully convertible and unlikely to become so anytime soon. At best they can do currency swaps with each other.
The next is the absence of a credible alternative reserve currency to replace the dollar. For better or worse we're stuck with the dollar short to medium term.
Finally the CCP has zero interest in letting their
renmimbi become a reserve currency because they like to fiddle with it. Constantly devaluing so risky to hold for extended periods. If countries are reducing their share of US treasury bonds then you have to wonder where they're putting their money because it won't be Chinese bonds.
Overall, while marginal de-dollarization is expected, rapid de-dollarization is not on the cards.
That is it. This topic was hot a year back and got lots of hype much of it was wishful thinking promoted by China who wants the positive PR but can't walk the talk.