Experts from many countries: It is a general trend that U.S. dollar hegemony will endanger the diversification of the world economic and monetary system
International Online Report (Reporter Huang Rong): In August, the “Johannesburg Declaration of the 15th BRICS Leaders’ Meeting” was released, which instructs relevant institutions to promote research on local currency cooperation, payment tools and platforms among BRICS countries. The BRICS countries have actively promoted cooperation in local currency settlement, making “de-dollarization” once again a hot topic in the international community. In an exclusive interview with reporters, many international figures said that promoting the diversification of the international monetary system is the consensus of many countries, is in the interest of all countries, and is the general trend of world economic development.
There are lies about the US dollar hegemony interfering with the convenience of “dollarization” of the world economy.
Gustavo Ng, founder of Argentina’s “Contemporary” magazine, pointed out that U.S. dollar debt is the epitome of U.S. dollar hegemony and has laid a bomb for the Latin American economy. He said that decades ago, international financial institutions under the control of the United States lent huge loans to Latin American countries. Now some Latin American countries are trapped in US dollar debt and their economies are stagnant. “Every time the U.S. dollar raises interest rates or every time the peso depreciates against the U.S. dollar, it will have a serious negative impact on the Latin American economy. This situation repeats itself over and over again, making it difficult for some Latin American countries to get out of trouble.”
Wu Zhiwei believes that the hegemony of the U.S. dollar interferes with the world economy. “Most countries around the world use U.S. dollars in almost all international payments, such as oil, minerals, food, etc., which increases trade costs. For some countries’ currencies that are more sensitive to fluctuations in the U.S. dollar exchange rate For example, in terms of the Argentine peso, it is very likely to have more dire consequences.”
Wu Zhiwei also quoted Horacio Rovelli, a professor at the University of Buenos Aires, as saying, “For Argentina, there are many lies about the convenience of dollarization.” Horacio Rovelli It is believed that using the U.S. dollar as a single reserve currency is risky, forcing Argentina to turn to other central banks to repay its debts to the International Monetary Fund when it lacks U.S. dollar reserves. Usually, the US dollar debt crisis will also lead to a sharp depreciation of the peso against the US dollar, which will lead to the collapse of Argentina’s national salary, welfare and pension system, and the sharp rise in price levels will make it unaffordable for most people.
Financial sanctions backfire on US dollar hegemony, and the world seeks to diversify its monetary system
Wu Zhiwei analyzed that the many financial sanctions imposed by the United States on Russia and other countries have prompted some countries to use their own currencies instead of the U.S. dollar for trade, accelerating the process of diversification of the international reserve currency pattern. Hisham Abu Bakr Metwally, chief economist at the Egyptian Ministry of Industry and Foreign Trade, made the same point, noting that China, India and Russia are all taking the lead in promoting trade in their own currencies. “Especially after Russia was sanctioned by the United States in 2014, Russia and China tried local currency swaps and payments in bilateral trade. Russia also established the ‘Russian version of SWIFT’ financial information transmission system (SPFS).” Hisham emphasized, Under the financial stick of US dollar hegemony, many countries in the world are actively seeking to promote the diversification of the international monetary system.
Hisham added that although the U.S. dollar is still the most common international currency, data from the International Monetary Fund show that the U.S. dollar’s share of global central bank foreign exchange reserves dropped to 58.36% by the end of 2022, the lowest level in the past 25 years. At the lowest level, the decline in the dollar share was also the largest among all currencies.
Hisham said that many countries around the world are actively using local currency settlements to carry out trade, and there are countless such examples. He mentioned that in January 2022, Turkey and the Central Bank of the United Arab Emirates signed a currency swap agreement worth 64 billion liras and 18 billion dirhams (approximately US$4.7 billion); in February 2023, the Central Bank of Iraq announced on its official website Issued a statement announcing for the first time that trade with China would be allowed to be settled directly in RMB to improve foreign trade financing and stabilize the exchange rate; on March 29, 2023, the Brazilian government announced that China and Brazil had reached an agreement to no longer use the U.S. dollar as an intermediary currency. Trade is conducted in local currencies; currently, transactions between Russia and India are also conducted in Russian rubles and Indian rupees respectively.
Hisham believes that although the U.S. dollar widely dominates global trade settlements, most developing and emerging market countries have begun to use their own currencies to pay for import and export trade. The motivation behind this is to counter the external risks brought by the hegemony of the U.S. dollar. The diversification of the world monetary system is in the interest of all countries and is the general trend of global economic development.
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2023-09-15 12:44:00
