- Nations such as Iran, Brazil, and Saudi Arabia are increasingly trading in Chinese yuan, not only with China but also with third countries, highlighting the growing momentum of de-dollarization.
- The IMF’s executive director for Russia, Aleksei Mozhin, stresses that the U.S. dollar’s global usage is misplaced given its association with one country’s national interests and economic obligations.
In an era witnessing a global shift towards de-dollarization, an increasing number of countries are choosing to trade in Chinese yuan, says Aleksei Mozhin, the International Monetary Fund’s (IMF) executive director for Russia. This trend is seen, notably, among nations such as Iran, Brazil, and Saudi Arabia who are trading in yuan not just with China but also with third countries.
In an interview with RIA Novosti, Mozhin shed light on this de-dollarization phenomenon, attributing the trend to Washington’s policies and actions that have spurred countries to search for alternatives to the U.S. dollar. He noted a rising adoption of other currencies, specifically the Chinese yuan, for cross-border transactions. Mozhin’s reflections underline an ongoing shift in the global economy, challenging the U.S. dollar’s long-held dominance.
Mozhin criticized the U.S. dollar’s extensive global use, given that it serves
“the purposes of national interests” and represents “the economic and financial obligations of one country.”
He emphasized that the dollar’s stronghold in the international economy is linked to a lack of competition, considering most worldwide settlements and deposits are dollar-denominated.
Concerns about the dollar losing its position as the world’s reserve currency have even resonated within the U.S. Treasury Secretary Janet Yellen has admitted that the extensive use of financial sanctions could undermine the dollar’s dominance. Echoing Yellen’s concerns, U.S. Senator Rand Paul warned of the weakening power of the USD, attributing this shift partly to U.S. foreign policy driving adversaries away and closer together.
While Mozhin anticipates a gradual decline in the dominance of the USD, he acknowledges,
“It’s clear that it will not happen at once, but the process has begun.”
This trend is evident in Russia, which has been transitioning from the U.S. dollar and euro to alternative currencies for foreign settlements. The use of Western currencies in Russia’s international settlements has reduced from 90% in early 2022 to below 50% by the year-end, according to Russian Deputy Minister of Economic Development Vladimir Ilyichev, who predicts this trend to continue.