https://www.aljazeera.com/amp/features/2023/3/7/will-russia-sanctions-dethrone-king-dollar
Thursday, April 6, 2023
Denouncing the Dollar
There has been a rise in interest between countries to abandon the US dollar as the world's reserve currency. I think the war in Ukraine has definitely exacerbated these efforts because the US currency has only appreciated 10% more since the start of the invasion. The article goes as far to say that the dollar's status as the world's reserve currency is enforcing its hegemonic power. While the appreciation of the dollar, is great for the US economy, it makes trade more expensive for other countries. Nations with US debt will also end up owing a lot more. So a bunch of other countries will benefit from the depreciation of the dollar. If the world begins to shift from the using the dollar as the main form of trade, the dollar will depreciate and will begin the rise of other hegemonic powers. This shift will of course happen gradually and not all at once.
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4 comments:
Good post! Many countries have started to stop using the U.S. dollar as their reserve and active trading currency. We see this due to the BRICS project gaining a lot more popularity and nations resorting to it instead of the dollar. I am curious to why people think the U.S. dollar is enforcing it's hegemonic power. I think the fact people have faith in our dollar is misleading and dangerous as inflation has destroyed it's real value and countries are losing faith in it's strength. To add to that, the U.S. debt problem is one that will never be resolved unless we put the dollar back on the gold standard, or make changes to reserve requirements. Growth will have to be sacrificed in order to save the dollar, but nobody wants to make that sacrifice.
This was really informative. I didn't know that the US dollar was starting to not be present in other countries. In your post you stated how it will impact other countries, but would that impact the US in any drastic way?
I think moving away from the USD as the world's reserve currency could benefit countries will lower buying power. However, the USD has proven to be very strong and holds its value relatively well. I wonder what they are considering using as the world's reserve currency. My guess would be either the Euro or the Pound. Great post!
Denouncing the dollar can have both negative and positive effects. The positive effect is that abandoning the US dollar as the world's reserve currency could lead to a more balanced global economic system, as it would reduce the dominance of the US in the international financial system. It would also make trade cheaper for countries that do not use the currency and could lead to increased trade between those countries.
The negative effect is that abandoning the US dollar as the world's reserve currency could lead to increased economic instability and uncertainty, as there is no clear alternative to the US dollar as a global reserve currency. If the US dollar depreciates significantly, it could lead to higher inflation and interest rates in the US, which could have a negative impact on the US economy.
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