Difference between revisions of "De-dollarization"

Latest revision as of 06:07, January 15, 2026

De-dollarization is the process of freeing countries from use of the dollar to denominate the values of goods and services exchanged. The use of the dollar means that all of the transactions pass through the American banking system, which means that the United States has a monopoly information flow of who is selling what to whom. This American domination and an exclusive commercial advantage is removed when trade is conducted in national currencies and do not go through the United States banking system. De-dollarization is a consequence of American abuse of the power of the dollar as the global reserve currency. It is the abuse of the global financial system by spendthrift Congresses and the Federal Reserve Board printing excess dollars and offering nothing of real value in terms of manufactured goods or services to back it up, thus robbing the rest of the planet.

BRICS group

(Left): U.S. Treas. Sec. Scott Bessent tries to convince investors to buy U.S. Treasury debt to finance the deficit;[1] (right): an X follower responds.[2]

The BRICS group, led by Russia and China began building an international finance and trading system that does not rely on dollars, that uses countries’ local currencies, gold, oil, or other assets to trade.^[3] The U.S. abuse of economic sanctions to blackmail and punish other countries that did not bend to America's will added to the impetus.^[4] The rise of BRICS means that the US dollar will, at a minimum, lose its relative monopoly on oil and gas trades and sales.^[5]

If the world favors a second, gold-based settlement system and opts out of the fiat money dollar, which is not backed by a tangible commodity with exchangeable value, this could lead to the end not only of dollar settlement, but also of the dollar imperium.^[6] The US has so far been able to pay for its foreign trade with its freshly printed money that does not represent any increased production of goods and services at all, to the benefit of its own prosperity in exchange for “fiat money”.^[7] If this were no longer possible, if the countries of the world no longer accepted worthless dollars, the USA would no longer be able to buy all the world's goods with them, to pay for $900 billion in military industrial complex expenditures and to cover its financial deficits.^[8] Dollar dominance will inevitably fade and the dollar decline as the world's top reserve currency, though it will undoubtedly continue to survive in that capacity in parts of the world where the US continues to have considerable political and economic leverage, like Latin America.^[9] In this respect, the financial boycott against Russia and a counter-reaction by the world could result in the collapse of the dollar empire.^[10]

In Asia, history is not a distant archive but a living standard by which present and future are measured. A central lesson in the Middle Kingdom spans the centuries: when the political center weakens, chaos follows—civil war, collapse, millions of deaths. This historical awareness still shapes China's policies today. Gold reserves are hoarded, dependence on the dollar gradually reduced, risks broadly diversified. Behind this is no short-term pragmatism, but a deep instinct: stability means survival. Confidence in one's own currency, political cohesion, and strategic foresight—all stem from experience, not forgetfulness.^[11]

Weaponization of the dollar

Countries that do not allow American interference in their social, political, and economic system are threatened with being labeled as human rights violators and economic sanctions.^[12]

Elon Musk explained the process of de-dollarization succinctly: "The United States has overplayed its hand in weaponizing the dollar with sanctions...You're now seeing a lot of countries de-dollar their transactions because we’ve forced it...And this goes beyond even Russia, China, and Iran...Countries like Brazil or India still want to transact with Russia...They can’t do it with dollars, so we've forced them to de-dollarize their transactions, thus weakening the strength of the dollar in the world."^[13]

Russian State Duma Chairman Vyacheslav Volodin observed on June 14, 2024, "The dollar has become toxic...Washington has totally undermined trust in the dollar as a global reserve currency by imposing illegal sanctions against our country’s financial institutions."^[14]

Sanctions regime and the SWIFT network

The SWIFT network is a Brussels-based global clearing office for communications between 12,000 banks worldwide in which they advise one another about incoming transfers.^[15] It is an essential building block in international trade, and was abused by the United States, who pressured the independent managers of SWIFT to conform to economic sanctions imposed on certain countries not abiding by the so-called "rules based order" dictated by the U.S. State Department from Washington, D.C..^[16] The "rules based order", also known as the Liberal world order, by-passes the historically recognized framework of the United Nations under international law as having sole authority to impose multilateral economic sanctions.^[17]

The United States under the Biden regime moved to de facto steal USD $300 billion held in foreign banks that belongs to Russia via a scheme ostensibly meant to fund Ukraine aid.^[18] Acts like these is what essentially drives the BRICS nations to pursue a new settlement and payment infrastructure that would bypass use of US dollars (USD) or euro, thus protecting the system's users from the United States and European Union using their currencies to blackmail other countries into compliance with the West's wishes.^[19] For example, the United States routinely employs or threatens economic sanctions against countries if they do not de-criminalize homosexuality or legalize gay marriage, alleging those countries to be "human rights violators".^[20] Even a change of administration in the United States cannot repair the loss of confidence and broken trust in the global financial system or assure such "rules based order" tactics would not occur again in the future to any party or nation participating in the SWIFT network.^[21]

Bricks+ Reserve Fund

The Bricks+ Reserve Fund was created, a $150 billion pool capitalized by Russia, China, India, Saudi Arabia, UAE, and other nations wary of Western financial weaponization. The fund's purpose to provide liquidity and financial stability for countries that faced Western economic sanctions or asset freezes. It is sort of an alternative IMF for the sanctioned and the nervous. But the real innovation was the mechanism. The fund would accept sovereign assets for safekeeping. But these assets would be held in distributed custody across multiple non-Western jurisdictions. No single country could freeze them. No Western court could seize them. The assets were legally structured to be seizure proof.

China contributed $50 billion. Russia committed $30 billion. Saudi Arabia and UAE added $25 billion each. India, Iran, and others filled out the rest. This wasn't just about the money. This was about creating financial infrastructure that bypassed Western control entirely.

Countries looking at what happened to Russian reserves in Europe had to ask themselves, "Are our reserves safe in London, Frankfurt, or New York?" The answer increasingly was no. The capital flight began immediately. Saudi Arabia quietly began diversifying its reserves away from European assets, not selling everything, but reducing concentration. UAE moved portions of its sovereign wealth fund holdings from European bonds to Asian assets. China accelerated its dedollarization efforts and reduced Euro exposure. Even non-aligned countries like Indonesia, Malaysia, and Mexico began discussing reserve diversification strategies.

The amounts involved were staggering. Sovereign wealth funds and central banks hold Trillions in European assets. Even a 10% reduction represents hundreds of Billions in selling pressure. European bond markets felt the impact. Yields rose as demand decreased. Borrowing costs for European governments increased precisely when they needed to borrow more for Ukraine aid and energy transition spending. The European Central Bank faced an impossible choice. Intervene to support bond markets by buying government debt, reigniting inflation, or let yields rise and watch governments struggle with debt service costs. They chose a middle path that satisfied nobody. Limited intervention that prevented crisis, but didn't restore confidence.

References

External links

• US Dollar Crisis - Global Investors Are Dumping Dollar as It Loses Value, September 15, 2025.
• U.S. $20 Billion BAILOUT To Argentina Signals Severe Panic Over De-Dollarization & CHINA