Economy

Is the End of the US Dollar’s Hegemony in Sight?

The US dollar has been the world’s reserve currency since 1920 and has become even more dominant since the introduction of the Bretton Woods system after World War II.

However, history tells us that a “global reserve currency” lasts 100 years, and so the end of the US dollar’s position is inevitable.

Recent developments suggest that the BRICS countries, led by China and Russia, are preparing to develop a joint digital currency, which may shift the world’s reliance on the US dollar as the reserve currency.

The Shift of Power

The BRICS countries have been making preparations for a joint that could potentially undermine the US dollar’s position.

Tensions continue to rise as geopolitical power shifts, and Russia has already announced that two-thirds of its trade with China is already conducted in yuan and rubles.

Additionally, Russia plans to use the Chinese yuan for trade with Asia, Africa, and Latin America.

us-dollar-position

Also, countries such as Saudi Arabia, and Turkey are also increasingly flirting with the BRICS alliance.

Together, these countries seem to be joining forces to tackle the United States’ dominant position by giving their own currency a push.

Digital Euro

The ECB has launched a digital euro as a central bank digital currency (CBDC), which is digital money issued exclusively by the central bank.

The digital euro has a much stronger monetary policy than the current euro, which is experienced an all-time low parity with the US dollar.

The launch of the CBDC seems to be a way to preserve the euro, which is burdened by European debt and a stagnating economy.

The Effect of Sanctions

The choice of these countries to join forces seems to be the direct result of the sanctions and interference of the West in their policies.

Sanctions have also awakened China and other countries to the fact that their currency reserves may be frozen by America in the future.

These countries are searching for an alternative and trying to make themselves less dependent on the West’s power.

The Possible Return to a Gold Standard

G20 countries are increasing their gold reserves, recognizing that a robust economy and a strong, stable currency equate to a solid gold supply.

Source: Tradingeconomics.com

An increasing regime change seems to be taking place in the monetary landscape, where fictitious balance sheets are being replaced by real assets.

The assets of a central bank should reflect the reality of a country’s economy, which is the basis of a stable monetary system.

Conclusion

The US dollar’s position as the world’s reserve currency may come to an end sooner or later.

The BRICS countries, along with the introduction of the digital euro and increasing gold reserves, suggest a shift in the monetary landscape.

The world may be preparing for a new monetary system, where real assets are valued over fictitious balance sheets. The end of the US dollar’s hegemony is not a question of if but when.

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