Friday, March 29, 2024

Russia is actively embracing settlements in national currencies with its partners, signaling a decline in the dominance of the US dollar, according to Foreign Minister Sergey Lavrov. Lavrov predicts that this transition away from the dollar will continue to gather momentum, extending beyond Africa to encompass Latin America, Asia (including Iran, India, and China). The utilization of national currencies in trade settlements between Russia and its partner countries is expected to gain traction, as trade volume grows. Lavrov believes this shift towards national currencies is the future and highlights the declining share of the US dollar. He cites Brazilian President Luiz Inácio Lula da Silva’s proposal for an independent payment system free from the dollar and euro, emphasizing the importance of agreements within the framework of the BRICS New Development Bank. The BRICS nations have been promoting economic cooperation and advocating for increased trade using national currencies. Alexey Overchuk, Russia’s deputy prime minister for Eurasian integration, reports significant progress in the Eurasian Economic Union’s move towards settlements conducted in national currencies, with 90% of trade settlements between member states already conducted in this manner. This trend towards de-dollarization is not limited to the Eurasian Economic Union but is also observed in other regions, such as Southeast Asia, where ASEAN member nations have agreed to promote the use of national currencies. Additionally, officials from nine Asian countries recently gathered in Iran to discuss de-dollarization measures. The growing efforts worldwide to reduce dependence on the US dollar suggest a potential shift in the status of the world’s reserve currency.

What is de-dollarization and why is Russia shifting away from the US dollar?

De-dollarization refers to the process of reducing reliance on the US dollar as the primary currency for international trade and settlements. Russia is actively shifting away from the US dollar in favor of settlements in national currencies with its trade partners. This move is driven by a desire to reduce vulnerability to US sanctions and increase economic autonomy. Russia, along with other countries, aims to strengthen economic cooperation and promote the use of national currencies in trade to diminish the dominance of the US dollar in the global economy.

Which regions and countries are involved in the de-dollarization trend?

The de-dollarization trend is gaining momentum globally. Russia’s shift towards settlements in national currencies extends beyond Africa to include Latin America, Asia (including Iran, India, and China), and other regions. The BRICS nations (Brazil, Russia, India, China, and South Africa) have been at the forefront of promoting economic cooperation and advocating for increased trade in national currencies. Additionally, the Eurasian Economic Union, Southeast Asian nations, and Asian countries have also shown efforts to reduce dependence on the US dollar and promote the use of their respective national currencies in trade settlements.

What impact does de-dollarization have on the US dollar’s status as the world’s reserve currency?

De-dollarization efforts worldwide raise questions about the future status of the US dollar as the world’s reserve currency. As more countries shift towards settlements in national currencies, the influence and dominance of the US dollar could diminish over time. However, it is important to note that the status of the world’s reserve currency is a complex issue influenced by various economic and geopolitical factors. The long-term implications of de-dollarization on the US dollar’s reserve currency status are uncertain and subject to future developments in the global economy.

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