The US dollar is being propped up by a range of unstable quick fixes, which are very rapidly coming undone as more and more countries are ditching the dollar as their reserve currency and preferred currency of trade. It appears to be following the logic of some domino effect – first one, then several, then many.
Russia has been trying for years to end its dependency on the dollar, but this requires the support of other countries. However, even US allies in Europe are disillusioned with Washington’s current policy, writes the Swiss daily Neue Zurcher Zeitung.
Russia has already taken several steps to become independent of the US currency. Moscow has set up its own payment system, sold a large part of its US Treasury bonds, and went on to carry out transactions in national currencies with some of its allies, Christian Steiner said in his article for the Neue Zurcher Zeitung .
The author of the article noted, however, that such initiatives cannot succeed without international cooperation.
At the same time, the American attitude is causing more and more outrage from the international community.
Washington, therefore, “is exposed to a danger that arose because of its own aggressiveness,” Steiner said.
US President Donald Trump’s trade policy has already caused irritation among leaders who previously did not oppose the hegemony of the dollar.
For example, last September in the European Union, debates started on the question of why the prices of the world’s major resources are denominated in dollars.
European Commission leader Jean-Claude Juncker complained that Europe pays 80% of energy imports in the US currency and described it as “absurd” that European companies buy European planes in dollars and not in euros.
To counter the hegemony of the dollar, Beijing launched oil futures in yuan, which soon showed strong growth. China has thus challenged the power of the US currency in the global energy market.
Steiner acknowledged that today there is as yet no currency that can replace the dollar, gain credibility among most investors, and become a global currency. “But when investors lose confidence in the US currency, the dollar will no longer play its key role,” Steiner concluded.
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