According to medium.com: There is a new fad for ‘De-Dollarization’ across the global south. This fad has been exasperated by ‘Russia-Ukraine’ war since there is a narrative going around in the global south that US/western Europe is responsible for Ukraine crisis and Russia is a victim of western hegemony. There are also plenty of agreements signed between Russia and other countries to trade with currencies other than dollars. There is also a narrative that since China de-coupled USA to become world factory, it can also successfully do the same with dollars by overthrowing it.

There have been many attempts from many nations to move away from the dollar. Ask Gaddafi and Saddam on how it ended for them 🙂

Seriously- I find this de-dollarizing more of a political showmanship rather than a move rooted in any economics.

Put simply, it works like this: Global trade happens in a currency which investors feel safe and trust. That feeling of safety and trust comes from an assurance that your money would be protected when you exchange goods and services. That assurance is backed by a guarantee that comes from an institutional backing. That institution is the American Government.

It all comes down to This.One.Factor 👇

If I- as an investor want to trade in an alternate currency- like Yuan/ Ruble/ Rupee/ Riyal/ Euro- I would need to be assured that the money I put in reaches safely to the intended place. If any of these governments can provide that security/ guarantee, I would shift to that government backed currency.

Lets look at the evolution of the US Dollar and why its strong.

In summary it works like this:

In early 20th century, the economy of US surpasses the economy of British Empire.
After the World War, the USD replaced the GBP as the global reserve currency.

In 1933- the US Dollar deviated from gold standard and de-pegged its currency from gold.
In 1944, the Bretton Woods Agreement institutionalizes US Dollar as the world’s currency.
1971- the Bretton Woods agreement dissolves.

Read the rest of the article BELOW: