Is this the end of the dominance of the US dollar?

The US dollar's position as the world's main reserve currency is being questioned as countries increasingly isolate themselves from Washington's influence. For decades, the dollar dominated the global monetary system. Currently, about 60 percent of foreign exchange reserves of central banks is in dollars, and almost 90 percent. of all currency transactions are made with the dollar. However, the dollar's reserve status began to decline in 2014 as some major world powers began to de-dollarize their trade deals.

The war in Ukraine and the subsequent sanctions inspired by it accelerated the process of de-dollarization. Chinese authorities were surprised by the seizure of the Russian central bank's foreign exchange reserves after the invasion of Ukraine. Which made them reflect that in the event of a conflict between the US and China, Chinese assets may also be at risk.

Dedollarization in front of our eyes?

• During a press briefing on forum in Davos In January, Saudi Arabia's Finance Minister Mohammed Al-Jadaan surprised reporters by stating that the oil-rich nation was willing to consider trading in currencies other than the US dollar for the first time in 48 years.
• Last week, Chinese and French energy companies closed the first-ever liquefied natural gas (LNG) deal in China using the renminbi yuan currency. The trade involved importing 65 tons of LNG from the United Arab Emirates and marks an important milestone in Beijing's efforts to challenge the US dollar's position as the universal "petrodollar" in gas and oil trade.
• Brazil also recently announced an agreement with China to trade directly in its own currencies, bypassing the US dollar as an intermediary.
• India is also making efforts to reduce the dominance of the US dollar in international trade by launching separate programs to settle transactions in its own currencies.
  The Reserve Bank of India recently allowed central banks in 18 countries to open special Vostro Rupee Accounts (SVRAs) to settle Indian Rupee payments.
• BRICS countries enhance cooperation with each other. State Duma Deputy Speaker Alexander Babakov recently stated that the BRICS countries - Brazil, Russia, India, China and South Africa - are working on creating their own currency.
  In his view, a new world order may emerge as developing powers step up their efforts to distance themselves from US hegemony and the US dollar.
• ASEAN, or Association of Southeast Asian Nations, founded on the ashes of the Association of South-East Asia formed by Malaysia, the Philippines and Thailand in 1961, is considering withdrawing transactions in USD, EUR, JPY and GBP.

The End of Dollar Dominance?

Overall, the share of the US dollar in the global market has fallen from 71% to 59% over the past two decades, and it may shrink even further in the future.

The main victim of this scenario is the United States because the use of currency in global trade is a zero-sum game. Every time the yuan, real or rupee is exchanged in the global market, the dollar is not exchanged. If credible alternatives gain momentum, America's global dominance will be threatened.