The Impact of Dedollarisation on Global Trade Dynamics

ABSTRACT

The current global trade dynamics have inspired a significant amount of action and attention, thus creating a pressing need for a comprehensive and contextual discussion on the profound impact of de-dollarization on global trade. When we examine the top nine global reserve currency clearing systems, which have been historically cited as being heavily underpinned by the US dollar, it becomes evident that the Swift one-way clearing authority stands out as a testament to the unparalleled dominance of the US dollar on a global scale. This unique position solidifies the US dollar as the supreme global currency, endowed with a complete one-way clearing advantage in terms of imports. To quote the renowned strategist Henry Kissinger, "the USA enjoys an exceptional monetary privilege." This extraordinary monetary privilege revolves around the intricate process of de-dollarization, which involves the gradual or even immediate deduction and eventual complete elimination of the US dollar within bilateral, trilateral, multilateral, regional, currency, money, financial systems, or markets where international trade conducts its intricate web of transactions – thereby creating a monumental shift in the distribution of monetary privilege among nations. As a result, other countries and economies now find themselves basking in the glow of a newfound monetary privilege that has the potential to reshape the global trade landscape in unforeseen ways.

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