US Dollar’s Importance Declining in International Transactions and as Reserve Currency, Economist Says – Economics Bitcoin News
A Canadian economist and professor at the University of British Columbia says the role of the US dollar in international trade and as a reserve currency is declining. He stressed that “other currencies have become more important in international transactions and as reserve currencies.”
An economist highlights the rising trend of dollar depreciation
Canadian economist James Brander shared his thoughts on the global trend of dollar depreciation and the impact of a diminishing US dollar last week. Brander is Professor of Asia and the Pacific in the Department of Strategy and Business Economics at the University of British Columbia.
He explained that the dominance of the US dollar in the global market is declining with an increasing number of countries choosing to conduct their international transactions using local currencies rather than relying on the dollar, Press TV reported. Noting that the US dollar is the “main reserve currency” and that “more than half of the world’s international currency reserves are in US dollars,” he said: “The role of the US dollar is declining. It is still large, but it is declining.” The economist added:
Other currencies are becoming more important in international transactions and as reserve currencies. The current geopolitical tensions have increased the move towards using other currencies…especially Russia, as well as China, and some other countries.
“More local currencies are used in international transactions,” the professor reiterated. “So, we have an India-Russia deal and it’s being transacted in either Indian currency or Russian currency. We’re seeing more of that rather than US dollars. I don’t see a problem with that.”
The imposition of economic sanctions by the United States, especially on Russia, is widely seen as an important impetus for other countries to move away from the US dollar. US Treasury Secretary Janet Yellen stated last month: “There is a risk when we use financial sanctions linked to the role of the dollar that over time it could undermine the dominance of the dollar … Of course, it creates a desire on the part of China, Russia and Iran to find an alternative.”
De-dollarization efforts are gaining momentum among the BRICS countries (Brazil, Russia, India, China and South Africa). The economic bloc is also working to create a common currency that helps its members reduce their dependence on the US dollar. The BRICS leaders are expected to discuss the matter at their next leaders’ summit in August. In addition, 10 Southeast Asian countries recently agreed to encourage the use of national currencies in transactions.
Do you think that the importance of the US dollar in international trade and as a reserve currency is declining? Let us know in the comments section below.
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