{"id":65236,"date":"2023-04-06T05:12:08","date_gmt":"2023-04-06T10:12:08","guid":{"rendered":"https:\/\/olduvai.ca\/?p=65236"},"modified":"2023-04-06T05:12:08","modified_gmt":"2023-04-06T10:12:08","slug":"de-dollarization-has-begun","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=65236","title":{"rendered":"De-dollarization Has Begun."},"content":{"rendered":"
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De-dollarization Has Begun.<\/a><\/h3>\n<\/header>\n
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Last week, China and Brazil reached an agreement\u00a0to settle trades in one anothers\u2019 currencies<\/a>. Over the past 15 years, China has replaced the United States as the main trading partner of resource-rich Brazil, and as such that shift may have been inevitable. But within the context of recent circumstances, this appears to be another in a series of recent blows to the central role of the dollar in global trade.<\/p>\n

As the world\u2019s reserve currency, the US dollar is essentially the default currency in international trade and a global unit of account. Because of that, every central bank, Treasury\/exchequer, and major firm on Earth keeps a large portion of their foreign exchange holdings in US dollars. And because holders of dollars seek returns on those balances, the ubiquity of dollars drives a substantial portion of the demand for US government bonds in world financial markets.<\/p>\n

The switch from dollars to a yuan-real settlement basis in Chinese-Brazilian trade is only the latest in a growing trend. Discussions of a more politically neutral reserve currency have gone on for decades. The profound economic disruption\u00a0experienced by Iran<\/a>, and\u00a0more recently Russia<\/a>, after being evicted from dollar-based trading systems like SWIFT, however, have led many nations to consider imminent contingency plans. India and Malaysia, for example, have recently begun\u00a0using the Indian Rupee to settle certain trades<\/a>, and there have been\u00a0perennial warnings about Saudi Arabia<\/a>\u00a0and other energy exporters moving away from the dollar. On that note, China also recently executed a test trade for natural gas with France\u00a0settled in yuan<\/a>.<\/p>\n

DXY Index (1980 \u2013 present)<\/strong><\/p>\n

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(Source: Bloomberg Finance, LP)<\/em><\/figcaption><\/figure>\n<\/div>\n

It\u2019s not just the conscription of the dollar in economic warfare, but increasingly error-fraught monetary policy regimes that are driving various interests away from the greenback…<\/p>\n

\u2026click on the above link to read the rest\u2026<\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

De-dollarization Has Begun. Last week, China and Brazil reached an agreement\u00a0to settle trades in one anothers\u2019 currencies. Over the past 15 years, China has replaced the United States as the main trading partner of resource-rich Brazil, and as such that shift may have been inevitable. But within the context of recent circumstances, this appears to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[23346,23347,130,1025,23345,827,839,5482],"class_list":["post-65236","post","type-post","status-publish","format-standard","hentry","category-economics","tag-aier","tag-american-institute-for-economic-research","tag-china","tag-de-dollarization","tag-peter-c-earle","tag-united-states","tag-us-dollar","tag-world-reserve-currency"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/65236","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=65236"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/65236\/revisions"}],"predecessor-version":[{"id":65237,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/65236\/revisions\/65237"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=65236"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=65236"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=65236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}