“There are some signs of de-dollarization in the commodity sector, as energy trades are increasingly priced in currencies other than the US dollar,” the report said.
The investment bank said the change reflects a broader trend of global trade and financial systems evolving to accommodate alternatives to dollar transactions.
“Globally, new payment systems could undermine the dollar’s influence by making cross-border transactions easier without the involvement of U.S. banks,” the paper said.
De-dollarization, as defined in the report, involves a significant decline in the use of the US dollar in international trade and financial transactions.
The report showed that new payment systems are emerging around the world that enable cross-border transactions without relying on U.S. banks. This change could weaken the dollar’s dominance and, by extension, the entire Western financial infrastructure. According to the report, the dollar’s share of foreign exchange reserves – often seen as a key indicator of the dollar’s dominance – has declined, particularly in emerging economies. However, the report noted that the US dollar remains the world’s main reserve currency and is widely used for trade and other global transactions. However, amid recent geopolitical developments, its dominance has come under increased scrutiny.
“With the world fragmenting into trading blocs in the wake of Russia’s invasion of Ukraine and intensifying strategic competition between the United States and China, the theory that the U.S. dollar’s status as a reserve currency is being eroded is gaining momentum.” said Joyce Chan, Chairman of Global Research. JP Morgan.
Additionally, BRICS countries are also exploring the possibility of issuing their own currencies for trade between BRICS countries. This could signal a move towards less dependence on the US dollar.
The BRICS countries have a total GDP of approximately $28 trillion, which is approximately 27% of the world’s GDP. The combined GDP of the BRICS countries using purchasing power parity (PPP) is approximately $65 trillion, which is approximately 33 percent of the world’s GDP PPP.
Russian President Vladimir Putin said at BRICS2024 in Kazan this month that the economic landscape has changed dramatically since 1992, when G7 countries accounted for 45.5% of global GDP and BRICS countries only 16.7%. .
According to 2023 data, BRICS countries currently account for 37.4 percent of global GDP, compared to 29.3 percent in the G7. “Inequalities are widening and this trend will continue,” Putin added. (Ani)
