There is no denying that the US dollar has garnered substantial distrust over the last two decades. The list of countries opting to conduct mutual trade in local or alternative currencies grows every day. The de-dollarization movement has found significant subscribers, even among US trade partners. However, the de-dollarizing agenda may not mean the end of the greenback. First, let’s discuss why countries are moving away from the dollar, and then we will discuss why it may not spell doom for the greenback.

What’s Pushing Nations Away From The USD?

The de-dollarization movement found a strong footing not just because of a growing distrust of the US dollar. There are several reasons why global central banks may want to reduce their dependency on the USD.

Firstly, central banks around the world most likely want to diversify their holdings. The rising US debt is causing substantial worry among economic experts. BlackRock CEO Larry Fink also highlighted his concerns around the rising US debt. Fink stated that the US dollar may not remain the global reserve, thanks to the rising debt.

Secondly, Western sanctions have pushed many nations to alternative currencies. Russia and China have conducted significant trade using the yuan. Iran and North Korea have also moved to other currencies for trade.

Thirdly, the world seems to be moving towards a multi-polar setup, instead of having just one superpower calling the shots. A multi-polar world will likely have multiple currencies going around.

Why It’s Not The End Of The US Dollar?

Despite the growing anti-US dollar sentiment, the greenback still accounts for 90% of global forex trades. Moreover, most of the global debt, derivatives, and trade invoices are still denominated in dollars.

While the yuan has seen increased usage over the last few years, it is still nowhere close to the US dollar in terms of liquidity. The USD is the most liquid currency in the world, making it an attractive choice for trade settlements. There is no real alternative to the US dollar just yet.

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Moreover, the US economy is still the strongest in the world, albeit China is catching up fast. The US military might and economic prowess are still second to none. Both factors are significant to the might of the US dollar.