The Impact of De-Dollarization on Global Markets

Hello everyone,

I've noticed an increasing trend of de-dollarization, where countries are reducing their reliance on the US dollar in international trade and finance. This topic seems to be gaining traction, and I'm curious to hear your thoughts on its potential implications.

They are selling T-bills and buying gold with excess funds. They are also using some local currency to conduct business, but the jury is still out on the quality of those currencies. That is why stacking PMs is important because I would not keep lunch money in some of the other currencies.

American hegemony is hemorrhaging. The East (BRICS+) will build an alternative to the current SWIFT/USD global trade payments system. The petrodollar system may or may not break down. Either way, the USD is waning and gold is important again.

You might also find this thread where these issue have been in an ongoing discussion for the last decade+ of interest:

pmbug said:

American hegemony is hemorrhaging. The East (BRICS+) will build an alternative to the current SWIFT/USD global trade payments system. The petrodollar system may or may not break down. Either way, the USD is waning and gold is important again.

You might also find this thread where these issue have been in an ongoing discussion for the last decade+ of interest:

Tin Foil Hats, Economic Reality and the Total Perspective Vortex

Conspiracy theories about a so called New World Order (NWO) and a one world currency have been around for a long, long time. So long that most people, who are not disposed to giving conspiracies a moment's thought, and who have been paying attention to the global economic news, have to be a...

www.pmbug.com

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Thanks for your information

The last I heard global trade in USD was down about 5%. Not enough to cause alarm in the short term. For now there is no replacement. Past comments by the fed have suggested a world where there are 2 reserve currencies with plenty of room for both to perform well. I do expect a scenario where that takes shape. Europe and the Americas trade in USD and the rest of the world in some other currency.
I know BRICS has suggested a currency backed by real commodities and I have mentioned that a backing must include a way to convert to the actual commodity. If it is backed by gold then you need to be able to get the gold. If you cant then it is backed by nothing.

So far China is the supposed leader in the East. However China has laws in place that says no gold or silver can leave China. The people in China can own it but can not leave with it. Also Chinas economy is bad enough that the people want gold and silver because they are worried about the economy.
A lot is going to change in the next decade and I don't know if anyone can imagine what the world will look like in 10 years. China has the belt and road initiative which should set them up as the world leaders in just about everything. Once that is fully functional there is no reason why they cant be the reserve currency of the east.
Then we have AI that is about to be released on the world. So far I don't see any need to have AI but I keep hearing the world is going to be a different place in as little as 5 years. I'm not sure how unless AI is going to replace humans and eliminate us.

SCMP opinion piece.

On June 10 and 11, Brics foreign ministers will gather in the Russian city of Nizhny Novgorod for an annual meeting. This event is hosted by Russia, which in January assumed chairmanship of the grouping, with over 250 events scheduled.

Since the beginning of the year, Brics has included five new countries: Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates, which have joined Brazil, Russia, India, China and South Africa.

This showcases the rising international profile of the format. The expanded group will undoubtedly play a more prominent role in global affairs and allow the voice of the developing world to be heard loud and clear. Nizhny Novgorod will also welcome at the event the foreign ministers of several Global South and Eastern states, as well as countries chairing regional cooperation formats invited for a separate session under Brics auspices.

searcher said:

SCMP opinion piece.

On June 10 and 11, Brics foreign ministers will gather in the Russian city of Nizhny Novgorod for an annual meeting. This event is hosted by Russia, which in January assumed chairmanship of the grouping, with over 250 events scheduled.

Since the beginning of the year, Brics has included five new countries: Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates, which have joined Brazil, Russia, India, China and South Africa.

This showcases the rising international profile of the format. The expanded group will undoubtedly play a more prominent role in global affairs and allow the voice of the developing world to be heard loud and clear. Nizhny Novgorod will also welcome at the event the foreign ministers of several Global South and Eastern states, as well as countries chairing regional cooperation formats invited for a separate session under Brics auspices.

Opinion | Russia will ensure expanded Brics plays a bigger role in changing world

Russia aims to ensure continuity and promote cooperation in three areas: politics and security, economy and finance, and cultural and humanitarian contact.

sc.mp

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If there is any transcripts around after the event please post them here so we get an idea of what sort of time frame they are looking at. I know they were looking at an alternative to the swift system as well but haven't heard anything on that in awhile.

The Euro was passed by with gold last week. Only the dollar exceeds trade volume.

What countries are really doing is getting rid of T-bills and UK bonds because of risk of confiscation. A UK pension fund recently had a problem raising cash because they got no bids for resale of their bonds and would need to take too big of loss in a fire sale. Don't buy long term bonds.

Opinion piece, take it fwiw and dyodd.

In the Market: How US is daring the world to find a dollar alternative​

June 10 (Reuters) - The United States is merrily chipping away at the pillars that hold up the dollar as the world's reserve currency, with the latest blows coming from some powerful Americans questioning the rule of law following the conviction of Donald Trump.

In doing so, it is effectively daring the rest of the world to find an alternative - and so far, it appears to be winning.

The attacks on the legal system in the aftermath of former President Trump’s conviction follow other moves that are seen by some as the United States throwing down the gauntlet to the rest of the world.

The country has radically increased the use of sanctions as a punitive foreign policy tool. And it is adding on an immense amount of debt, leaving hapless foreigners who seek the safety and depth of its markets to fund its excesses.

Over the past three weeks, I have been asking financial services executives, global investors and other experts in Asia and the United States how long they think the Americans can keep at it without meaningful blowback. Several of the sources requested anonymity to speak candidly about the situation.

DYODD

Dollar Dominance in the International Reserve System: An Update​

Dollar dominance—the outsized role of the US dollar in the world economy—has been brought into focus recently as the robustness of the US economy, tighter monetary policy and heightened geopolitical risk have contributed to a higher greenback valuation. At the same time, economic fragmentation and the potential reorganization of global economic and financial activity into separate, nonoverlapping blocs could encourage some countries to use and hold other international and reserve currencies.

Recent data from the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) point to an ongoing gradual decline in the dollar’s share of allocated foreign reserves of central banks and governments. Strikingly, the reduced role of the US dollar over the last two decades has not been matched by increases in the shares of the other “big four” currencies—the euro, yen, and pound. Rather, it has been accompanied by a rise in the share of what we have called nontraditional reserve currencies, including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and the Nordic currencies. The most recent data extend this trend, which we had pointed out in an earlier IMF paper and blog.

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searcher said:

... it has been accompanied by a rise in the share of what we have called nontraditional reserve currencies, including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and the Nordic currencies. ...

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i have not read the IMF page yet, but I can guess that the 3 I bolded are on the rise because some nations want to trade for commodities with bilateral trade (ie. not using the USD).

Gold will be the reserve currency.

Cigarlover said:

If there is any transcripts around after the event please post them here so we get an idea of what sort of time frame they are looking at. I know they were looking at an alternative to the swift system as well but haven't heard anything on that in awhile.

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fwiw

The Dollar's Supremacy Wanes As BRICS Build Alternative System.​

Jun 15, 2024 #geopolitics #money #currency

I was recently interviewed by Rick Munn of TNT Radio and we talked about the breaking up of the post-World War II dollar system.
We also touched upon America's burden and how rising interest rates could finally put the whole financial and monetary system at risk.

17:06

Podcast here, nothing to see, can listen in one tab and play around the forum in a different tab. FWIW......interesting chat but dyodd.

PETER ZEIHAN || Global concerns over US dollar dominance and potential risks of dedollarization​

Jun 13, 2024 #peterzeihan #geopolitics

20:47

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The share of USD-denominated foreign exchange reserves fell to 57.4% of total exchange reserves the lowest since 1994, according to the IMF’s COFER data for Q3 2024. USD-denominated foreign exchange reserves include US Treasury securities, US agency securities, US MBS, US corporate bonds, US stocks, and other USD-denominated assets held by central banks other than the Fed.
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