Responsible Statecraft

Written by Eli Clifton

Dedollarization appears to be an unstoppable trend as countries around the world look to reduce their dependence on U.S. currency.

Countries, particularly those in the Global South, are reducing their U.S. dollar reserves, settling cross border transactions in non-dollar currencies, and exploring the formation of new multilateral settlement mechanisms.

A major driver of this trend is Washington’s weaponization of the dollar via expansive sanctions that currently cover 29 percent of the global economy and 40 percent of global oil reserves.

Two recent Responsible Statecraft articles, one authored by International Crisis Group co-chair Frank Giustra and another by Quincy Institute Non-Resident Fellow Amir Handjani, began the process of explaining the drivers of this economic trend, as well as the geopolitical pitfalls facing the U.S. as much of the world reduces its dependence on the dollar, especially if the U.S. fails to engage other countries in the process of forming a multilateral monetary system.

In this video, Giustra and Handjani make the case for the U.S. acknowledging the trend of dedollarization and for Washington to address the national security dangers, as well as global economic and political instability, associated with this unmanaged decline of U.S. economic hegemony.