Why are so many countries de-dollarizing and what does it mean for the US?
Well, lets go back to the beginning. The dollar got it beginning in the second decade of the 20th century. It was backed by gold. After WWII, when Europe was in shambles, the US contributed great sums of money to help Europe rebuild. It was called the marshall plan. So, naturally Europe began to see the US as a benevolent country. America had a good reputation and was trusted by all of the western European countries. So as a gesture of goodwill, they began to use the US dollar as their currency “of choice”. https://en.m.wikipedia.org/wiki/International_use_of_the_U.S._dollar
In 1971, the dollar stopped being backed by gold. Even so, the US was still well thought of as philanthropic by most countries of the western world.
But the global south didn’t feel the dollar was being used in a fair way when it came to them. They felt the US manipulated and controlled the worth of their own currencies. But the time came when those countries decided to try and do something about it.
For a time, there was nothing at all they could do about it. But in 2009 a group of countries calling themselves the BRIC group was formed their own economic trading bloc to combat the “weaponization” of the US dollar against them. They were Brazil, Russia, India, and China. In 2010 S Africa joined them, and they became the BRICS nations.
With just those nations as part of the group, they comprised 40% of the world’s population, 30% of the worlds GDP, and 16% of world trade.
Next, the US began trying to confiscate (taking/stealing) money that belonged to certain countries (Venezuela 2023, Juan Guaido), (Russia 2024, Ukraine) and giving that money to whomever it wanted to, with the entire world watching on.
In 2015, the BRICS countries decided to start their own New Development Bank. This bank would lend money to countries formerly called “third world” countries, now called developing nations, at much better terms than they were receiving from western banks; the IMF and the World Bank.
In 2023, six more countries joined the group.; Egypt, Ethiopia, Iran, Saudi Arabia and the UAE. And there are thirty more countries waiting for their applications to be approved.
With the US, as the world’s trustee, acting in such an arbitrary way with other countries’ funds, why would any country want to allow the US to hold their money in America’s central banks? As the New Development Bank’s share if funding grows, the IMF and World Bank’s share shrinks.
And knowing all this, the question now seems to be “how long will it be before the New Development bank overtakes the IMF and World Bank as the world’s banking system”?
To be sure, no other currency will ever replace the dollar as the entire world’s reserve currency, but the intention is to stop the dollar from being such a dominant influence in the international monetary community. And with the BRICS countries growing in leaps and bounds like they are, the strategy will succeed. It’s just a matter of time.
