"3 reasons countries around the world want to break up with the dollar"

" 3 reasons countries around the world want to break up with the dollar \r\n\r\n \r\n\r\nThe dollar has been the world's\u00a0 reserve currency \u00a0since World War II, but a combination of political and economic reasons is slowly chipping away at its supremacy.\r\n\r\n \r\n \r\n \r\n \r\n\r\nNearly 60% of international reserves are held in dollar-denominated assets, according to the\u00a0 International Monetary Fund . The dollar is also\u00a0 the most widely used currency for trade .\r\n\r\n \r\n \r\n\r\nNow, Western-led sanctions against Russia related to its invasion of Ukraine are making other countries wary of potential consequences of crossing Washington.\r\n\r\n \r\n \r\n\r\nSome, such as Brazil, Argentina, Bangladesh, and India, are\u00a0 lining up backup currencies and assets \u00a0\u2014\u00a0 such as the Chinese yuan and bitcoin \u00a0\u2014\u00a0 for trade and payments .\r\n \r\n\r\nWhile the macro-geopolitical environment is spurring countries to seek alternative currencies, there's long been uneasiness over the dollar's outsized dominance in global trade and finance.\r\n\r\n \r\n \r\n\r\nThis de-dollarization talk has come back in waves every few years\u00a0 since at least the 1970s .\r\n\r\n \r\n \r\n\r\nHere are three other reasons countries around the world are attempting to line up plans to possibly move away from a dollar-dominated world.\r\n\r\n \r\n \r\n 1. US monetary policy holds too much sway over the rest of the world \r\n\r\n \r\n \r\n\r\nThe US is the issuer of the world's reserve currency, which is also the dominant currency in international trade and payments systems.\r\n\r\n \r\n \r\n\r\nConsequently, it has an outsized hold on the world economy and is often overvalued, the\u00a0 Wilson Center think tank reported in May .\r\n\r\n \r\n \r\n\r\nThis position has afforded the US what Valry Giscard d'Estaing, the president of France from 1974 to 1981, called an \"exorbitant privilege.\" One facet of this privilege is that the US might not run into a crisis if it is unable to pay its debt when the value of the dollar falls sharply because Washington could simply issue more money.\r\n\r\n \r\n \r\n\r\nIt also means that countries around the world have to tail US economic and monetary policies closely to avoid a spillover impact on their economies.\r\n\r\n \r\n \r\n\r\nSome countries, including India, have said that they are sick and tired of US monetary policies holding them hostage \u2014 going as far as to say that the US has been an irresponsible issuer of the world's reserve currencies.\r\n\r\n \r\n \r\n\r\n A working group at the Reserve Bank of India \u00a0is now pushing to use the Indian rupee for trade \u2014 a stance that is in with Indian Prime Minister Narendra Modi's vision for the currency.\r\n\r\n 2. The strong USD is getting expensive for emerging markets \r\n\r\n \r\n \r\n\r\nThe greenback gaining strength against most currencies around the world is making imports far more expensive for emerging nations.\r\n\r\n \r\n \r\n\r\nIn Argentina, political pressure and a decline in exports contributed to a fall in US-dollar reserves and pressured the Argentinian peso which, in turn,\u00a0 fueled inflation .\r\n\r\n \r\n \r\n\r\nThis has spurred Argentina to start paying for Chinese imports using yuan instead of US dollars, the nation's economy minister said on Wednesday,\u00a0 Reuters \u00a0reported .\r\n\r\n \r\n \r\n\r\n\"A stronger USD would weaken its role as reserve currency,\" economists at Allianz, an international financial-services firm, wrote in a\u00a0 June 29 report . \"If access to USD becomes more expensive, borrowers will search for alternatives.\"\r\n\r\n \r\n \r\n\r\n Brazilian President \u00a0Luiz Incio Lula da Silva has been one of the most vocal proponents of setting up alternative trade-settlement currencies, going as far as to egg on Brazil, Russia, India, China, and South Africa to move away from the US dollar.\r\n\r\n \r\n \r\n 3. Global trade and oil demand is diversifying \u2014 putting the petrodollar at risk \r\n\r\n \r\n \r\n\r\nA key reason the US dollar became the world's reserve currency is that the Gulf countries in the Middle East used the greenback to trade oil \u2014 because it was already a widely used trade currency by the time they were trading oil.\r\n\r\n \r\n \r\n\r\nThe arrangement was formalized in 1945 when the oil-giant country\u00a0 Saudi Arabia and the US reached a historic deal \u00a0wherein Saudi Arabia would sell its oil to America only using the greenback. In return, Saudi Arabia would reinvest excess dollar reserves into US treasuries and companies. The arrangement guaranteed US security for Saudi Arabia.\r\n\r\n \r\n \r\n\r\nBut then the US became\u00a0 energy independent \u00a0and a\u00a0 net oil exporter \u00a0with the\u00a0 rise of the shale-oil industry .\r\n\r\n \r\n \r\n\r\n\"The structural change in the oil market brought about by the shale-oil revolution can paradoxically hurt the role of the USD as the global reserve currency since oil exporters, which play a crucial role in the USD status, would need to re-orient themselves to other countries and their currencies,\" Allianz economists reported.\r\n\r\n \r\n \r\n\r\nIt's not just oil, either.\r\n\r\n \r\n \r\n\r\nThe relationship between the US and Saudi Arabia \u2014 which\u00a0 has been described \u00a0as similar to\u00a0\" frenemies \" \u2014 has also been testy over several issues in recent years, such as when\u00a0 then-President Donald Trump \u00a0complained that Saudi Arabia wasn't paying the US a fair price for\u00a0 its defense , \u00a0and when\u00a0 President Joe Biden snubbed \u00a0Crown Prince Mohammed bin Salman over the murder of the Washington Post journalist Jamal Khashoggi.\r\n\r\n \r\n \r\n\r\nSuch tensions, against the backdrop of the shale-energy revolution, raise the possibility that Saudi Arabia could abandon its US-denominated oil pricing one day, Sarah Miller, an editor at\u00a0 Energy Intelligence ,\u00a0 an energy-information firm ,\u00a0 wrote in November last year .\r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n "

"3 reasons countries around the world want to break up with the dollar"

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