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Long but Irreversible Trend of De-dollarization

World Affairs June 1, 2023

By NewsChina Updated Aug.1

Failing to balance its dual role as a national and international currency and weaponized as a means to maintain US global hegemony, the US dollar, used for international reserves and payment settlement, has encountered a wave of de-dollarization. Against the backdrop of the Federal Reserve’s continued tightening of monetary policy since early this year, several countries including Japan, Israel and Brazil are reducing their dollar reserves. Unwilling to fall prey to US capital which may flood into less developed countries when the US Fed lowers interest rates after consecutive hikes since March 2022, many countries are calling for diversification instead of the dollar’s dominant but less credible role. However, considering the timing and cost, de-dollarization is a long process in which countries like China still need a mature financial market to make their currencies go global.