[World Theory] Foreign Media: Create a cocoon and bind oneself! The weaponization of the US dollar has accelerated the "de dollarization" of the gold standard | US dollar | foreign media

On July 10th, China Daily reported that the Anglo gold standard and the US dollar standard reflect centuries of imperial monopoly power. With the continuous transformation of the international environment and the weaponization of the US dollar, people's distrust of the current system has reached a new level, causing some countries to feel very panicked and gradually preparing reserve currencies for trade. People are concerned that the US dollar may become a permanent political tool or be used as an economic strategy to force other countries to impose sanctions against their own will.

Screenshot of a report on the European website Modern Diplomacy

The European website Modern Diplomacy reported on the 6th that the Independent Media Research Institute stated that "de dollarization" has clearly arrived. After the dissolution of the Soviet Union, the United States announced the establishment of a new world order and launched a series of new wars, including the war against Iraq. However, it now seems that the era of petrodollars is coming to an end at an astonishing speed. The issue of the US dollar only increases and does not decrease, as all the pillars supporting the petrodollar are unstable.

Firstly, the United States is no longer the dominant manufacturer, and many countries are also catching up in science and technology. Secondly, for countries in the global South, the United States no longer seems to be an attractive development model. In addition, the United States has imposed sanctions on multiple countries, each of which has begun to achieve critical mass through mutual transactions. Finally, after the withdrawal of the US military from Afghanistan, military power is no longer considered supreme. The monetary system reflects the power relations in the world: they do not change these relations. The Anglo gold standard and the US dollar standard reflect centuries of imperial monopoly power. However, in a multipolar world, more diverse arrangements should be expected.

In its report on the 7th, the magazine pointed out that the current geopolitical system and all its accompanying features are achieved by the dominance of the US dollar as the world's reserve currency. Supporters of the current order faithfully believe that with the support of US military power and Western economic dominance, this system will be maintained indefinitely.

The hegemony of the US dollar is self inflicted.

But the international environment is beginning to shift, partly due to the flourishing development of economic alliances outside the scope of Western supported international institutions, and partly due to policy decisions by these institutions and their American sponsors. No recent action has accelerated this transformation more than the decision of the United States to freeze and seize the foreign exchange reserves of the Russian Federation at the beginning of the Russia-Ukraine conflict.

The weaponization of financial reserves has raised people's distrust of the current system to a new level. The article suggests that the end of the dominance of the US dollar may not come soon, but this possibility is much greater than many Western countries are willing to admit.

In a recent report on the Business Insider website, it was also mentioned that in the context of "de dollarization", countries around the world have chosen alternative currencies for trade. Since World War II, the US dollar has been the world's reserve currency, playing a crucial role in global trade and financial systems. But the comprehensive sanctions imposed by the United States and its allies on Russia and their expulsion from the US dollar dominated global financial system have caused great panic among other countries, to the extent that they are now gradually preparing reserve currencies for trade.

A working group of the Bank of India stated in a report that "the internationalization of currency is also closely related to the country's economic progress, especially its position in global trade." Although the macroeconomic and geopolitical environment is prompting countries to seek alternative currencies for trade, the dominant position of the US dollar in global trade and finance has long been unsettling. RBI emphasized in its report that the United States needs to maintain its obligations and responsibilities as a reserve currency issuer, but when forced to make a choice between its own interests and those of other countries in the world, the US government has "not hesitated to protect its own interests" in the past. The report also states that this is a problem as it exacerbates the imbalance of the international monetary system, which has tilted towards the United States.

The United States has long abused the hegemony of the US dollar, causing serious harm to other countries.

In a previous Bloomberg report, former currency expert at Morgan Stanley and CEO of globally renowned asset management company Eurizon SLJ Capital Ltd., Ren Yongli, also stated that the US dollar is losing its reserve position at a faster rate than widely believed.

Ren Yongli and his colleague Joanna Freire wrote in a report that the share of the US dollar in global reserves in 2022 will decline 10 times faster than the average rate in the past 20 years, because many countries are looking for alternative currencies after the Russia-Ukraine conflict triggered sanctions against Russia.

"In 2022, the market share of the US dollar as a reserve currency experienced a stunning collapse, probably due to its tough use of sanctions," they said. "The abnormal actions taken by the United States and its allies against Russia have shocked large foreign exchange reserve holders, many of whom are emerging economies from the so-called 'global south'.".

The article points out that the Biden administration's weaponization of the US dollar has accelerated the search for alternative solutions in other countries. Some smaller countries are trying to de dollarize, while others are concerned that the US dollar may become a permanent political tool or be used as an economic strategy to exert additional pressure on countries that may disagree, forcing them to implement sanctions.

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