The global monetary order based on the US dollar has been challenged in many ways. (Reuters)
The U.S. dollar-based global monetary order has long been challenged in many ways, but two stand out in particular: the proliferation of de-dollarization efforts, and central bank-promoted digital currencies (CBDC). De-dollarization has clearly accelerated recently. From France to Saudi Arabia, from Brazil to Southeast Asia, there have been major monetary and trade policy shifts in just 48 hours.
First, mainland China and France’s TotalEnergies completed the first liquefied natural gas transaction settled in RMB, and then the King of Saudi Arabia approved a memorandum of cooperation, granting Saudi Arabia the status of the Shanghai Cooperation Organization (SCO) Dialogue partner status. Afterwards, China and Brazil finalized an agreement on direct trade settlement in the currencies of the two countries, and finally, the finance ministers and central banks of the ten ASEAN countries (ASEAN) started meetings to abandon the US dollar, the euro and the yen.
Brazil and mainland China reached an agreement on the 29th. The two countries will directly conduct trade and financial transactions in their respective currencies, exchanging renminbi and riel, without first converting the currencies into U.S. dollars for settlement.
After the end of the Cold War, the world has generally maintained the "unipolar era", the United States is the undisputed hegemon, and the US dollar is the currency of choice. But today, geopolitics is once again challenging the existing world order. Mainland China has created a new type of globalization through the "Belt and Road" plan, the BRIC countries plus emerging economies, and the "Shanghai Cooperation Organization" alliance. .
China and Russia are particularly active in "de-dollarization". In February this year, the transaction volume of renminbi in Moscow's foreign exchange transactions surpassed that of the U.S. dollar for the first time, becoming the most important trading currency, with a market share approaching 40%. Due to the Russo-Ukraine war and the sanctions against Russia by Western countries, the RMB suddenly became the primary regional currency in northern Eurasia.
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