The Death of the Dollar: The Rise of a Multi-currency World

Internationally, many countries are clamoring for "de-dollarization" because they suffer from the hegemony of the US dollar. And some countries are also in the process of trying. At present, the status of the US dollar in the international monetary system has been severely weakened, but the US dollar is still the valuation and settlement of international bulk commodity transactions, as well as the reserve currency of various countries.

The reason why the U.S. dollar can become an international currency is mainly due to the following three reasons: First, after World War II, the United States provided reconstruction funds to Europe through the "Marshall Plan", which allowed the economies of European countries to recover quickly. As a result, European countries also had to accept U.S. dollars, which formed the largest U.S. dollar trading market outside the United States, which also strengthened the dependence of European countries on U.S. dollars.

Second, the GDP of the United States is the largest in the world, and the United States is also the largest consumer market in the world. More importantly, the military strength of the United States is also the strongest in the world, which has laid the foundation for the hegemony of the US dollar. Earlier, the UK pound was the strongest currency. Since Britain’s international influence has been declining after World War II, and its economic scale cannot be compared with that of the United States, it can only give up the international hegemony of the British pound to the U.S. dollar.

Third, in order to maintain the dominance of the U.S. dollar in the global monetary system, the United States signed an agreement with Saudi Arabia, a major OPEC oil producer, that Saudi Arabia’s oil exports will be priced and settled in U.S. dollars. Affected by this, other international commodities also use the U.S. dollar as the pricing and settlement currency.


In recent years, many countries around the world have entered the process of "de-dollarization". For example, Russia has polished almost all of its U.S. debt in the past few years. settlement. At the same time, Russia increased the proportion of gold in foreign exchange reserves to 23%.

In addition, when India conducts oil transactions with Iran, it has also used Indian rupees for settlement. And China is also in the process of "de-dollarization". In addition to reducing its holdings of U.S. debt on a large scale and reducing the proportion of U.S. dollar assets in foreign reserves, it is also using chinese yuan to settle oil purchases from Saudi Arabia. According to relevant data, last year China's largest crude oil supplier was Saudi Arabia, and China purchased 25% of Saudi Arabia's crude oil.

So, why do the three countries China, Russia, and India want to challenge the hegemony of the US dollar? There are two main reasons: First, after the outbreak of the global epidemic in 2020, the Federal Reserve printed money aggressively and passed on the economic crisis to the world.

The continued depreciation of the U.S. dollar index has caused many countries with U.S. dollar assets to complain, because it means that their U.S. dollar assets have shrunk sharply. In order to avoid shrinking dollar assets in their hands, some countries can only choose the path of "de-dollarization".

Furthermore, countries such as Russia, Venezuela, and Iran have been subject to long-term economic sanctions by the United States, and the financial assets of these countries in the United States will also be threatened by freezing. As a result, not only will the international reputation of the United States be affected , but it will also accelerate the process of "de-dollarization" in these countries subject to economic sanctions.

Now the question is, China, Russia, and India are gradually "de-dollarizing", so how long can the dollar's dominance in the global currency system last? My answer is that the road to "de-dollarization" in various countries will be repeated and it will be very long, but the loss of the US dollar's international hegemony is also the general trend. From the current point of view, the international hegemony of the US dollar has been seriously weakened, but it will not be lost immediately:

First, the U.S. dollar currently accounts for about 60% of global foreign exchange reserves, and is still the dominant player. The second is the euro, accounting for about 20%, while the Chinese Yuan only accounts for about 2%. In addition, the US dollar accounts for about 40% of the international payment market, still ranking first. Therefore, in the short term, the US dollar's international currency hegemony will only be gradually weakened, but it will not end.

Second, although countries such as Russia, Iran, Venezuela, and India are trying their best to de-dollarize, their influence on the international economic stage is not very strong, and they cannot shake the dollar's hegemony.