The dollar is in trouble. Author: time to dream

Dizzying, some say, pointing to how quickly the use of the dollar in international commercial and financial transactions is being replaced.

Bilateral agreements and possible regional solutions mark a decline in the use of the dollar.

This is, first of all, a response to the need for the survival of the South or strong countries that are equally attacked by US foreign policy, such as Russia or China, which is not under sanctions, but together with Moscow acts as another pole of power, alternative Washington’s power based on obligations and conditions, he wants to drive as he pleases. Threads that move the world.

Abandoning the dollar is also a step towards greater independence. Reducing its use in commercial relations gives these countries a free hand to overcome the obstacles of an unfair financial, economic and trade order – with IMF funds – during a deep crisis, exacerbated by sanctions against Moscow.

Experts point out that de-dollarization is a phenomenon that has been going on for decades. But it has gained an inevitable momentum in recent months, exacerbated by a projected fall in global GDP, a steady rise in inflation and a looming new external debt repayment crisis.

The need for survival for countries whose treasury is empty of dollars is an argument in favor of the positions taken. And these measures, in turn, are pushing for a slow but inexorable decline of unipolarity.

Such a challenge to the instruments of domination left behind by the Bretton Woods agreements has not been taken with such force until today.

However, the ongoing process of de-dollarization has its own significance. This was recognized by former US President and new presidential candidate Donald Trump, who, in the midst of campaigning against Joseph Biden, a candidate for re-election, expressed concern not only for the financial consequences of this phenomenon, but also because of its political consequences.

“The world around us is collapsing, we may even lose the dollar standard around the world. And if we lose the dollar standard, it will be like losing the war. In many ways, this is even worse than losing the war,” admitted the real estate magnate.

Experts note that the hegemony of the dollar is not only a privilege, but also an asymmetry of forces in favor of the US economy.

Oxygen and geostrategy

One of the latest news in this area was the entry into force by Argentina of a pre-existing agreement with China to conduct commercial transactions between them in yuan.

Argentine Economy Minister Sergio Massa said his country will pay in Chinese currency for imports equivalent to $1.04 billion during April and $790 million in May.

This, he acknowledged, “ceases holding back the outflow” of dollars, thereby “improving the country’s net reserve prospects” and providing it with maneuverability.

If such an agreement can be transcendent for any country, it is for the southern nation, which is indebted to the marrow of the bones to the International Monetary Fund; barely abiding by the rescheduling of payments that divided the country and opened cracks in the government’s Frente de Todos, is now the victim of a drought that has tightened the noose around his neck, just as the presidential elections are due to be held.

Certainly less desperate and perhaps more geostrategic was the decision taken by Brazilian President Luiz Inácio Lula da Silva during his recent stay in Beijing.

Among the 15 agreements signed with his colleague Xi Jinping is an agreement to conduct commercial exchanges in their respective national currencies, which analysts see as “aid” to accelerate the financial changes needed for the new geopolitics.

In this sense, Brazil’s proposal to adopt a regional currency in Latin America takes place, which he discussed with his Argentine colleague Alberto Fernandez, and this would have precedents in Sucre (Unique Regional Compensation System): a project that governments adopted Alba in 2009 to facilitate trade between their countries regardless of the dollar, and as a precedent for a common currency.

Hugo Chávez, one of her promoters, saw the initiative at the time as “a step towards our monetary sovereignty to free ourselves from the dollar dictatorship that the Yankee empire has imposed on the world.”

From Yuan to BRICS

In recent weeks, other countries have agreed to stop using the dollar in some commercial transactions, such as India, Bangladesh, Saudi Arabia, the United Arab Emirates and Egypt, countries that have agreed to use local currencies in these exchanges.

While it cannot be said that it is acting as an alternative currency, the truth is that the “anti-dollar flu” and China’s economic and financial policies are benefiting the yuan, while Beijing is strengthening its financial sovereignty.

According to the financial consulting agency Bloomberg, citing sources in the US Monetary Authority, the participation of the Chinese currency in cross-border payments and receipts from this country increased in March to 48 percent; In other words, nearly half of China’s trade is already in its currency.

But, in addition, the influence of the yuan in the world has increased.

“The internationalization of the yuan is accelerating as other countries look for an alternative payment currency to diversify risk, and confidence in the Federal Reserve is no longer as good as it used to be,” the DBS Bank economist admitted, while he touched on another point of the phenomenon: the growing distrust of the dollar.

But he made it clear that abandoning the dollar entirely could go a long way and that “the yuan’s share of global payments can always be small.”

If a nation should bet on an alternative currency to the dollar, it is Russia under sanctions, whose economy has evaded retaliation while strengthening the ruble. Its President Vladimir Putin is credited with statements related to the goal of also promoting the use of the yuan as a payment currency in his country’s trade with Asia, Africa and America.

The group, which is expected to take important steps that will contribute to de-dollarization, consists precisely of Brazil, Russia, India, China and South Africa, and 13 countries have officially requested their entry, and another six have expressed their intention to do so. . The BRICS are expected to announce important agreements at their next summit in August.

It is strongly noted that the group may begin the process of adopting a single currency, which would also mean the introduction of another means of payment other than the dollar.

According to Deputy Chairman of the State Duma of the Russian Federation Alexander Babakov, such a currency will be backed not only by gold, but also by real resources, such as land and rare earth metals. “The resources are there,” he said.

The affiliation of former Brazilian President Dilma Rousseff, at the helm of the so-called BRICS New Development Bank, and the closeness of her geostrategic ideas to those of her mentor Lula combine the potential of the institution to signal the hope of changing hegemonism. US.

The BRICS Bank has funds that are said to be greater than those of the G7 and almost equal to those of the World Bank, and there has been talk that it could help heavily indebted developing countries, which would mean providing an exit, by the way. for real estate prescriptions of the International Monetary Fund.

The world of the dollar is not dead, but it is blurring.

Source: Juventud Rebelde