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2020 4th Edition (Other Editions)

De-dollarization, the rising revolt against the dollar

The U.S. dollar has been the world’s major reserve currency for decades. Investors and treasuries in different countries used to deem the dollar as one of the safest investments in the world.

However, more and more powerful counties such as Russia, China and the European Union have started to de-dollarize as they want to abstain from U.S. jurisdiction when they transact in dollars.

Take Europe as an example. Europe wants to do business with Iran but such deal is prohibited if the goods are transacted in dollars. This provides strong motivation for them to steer away from the dollar and opt for other transaction vehicles like China’s yuan.

It is without doubt that the dollar is not as dominant as before, but whether de-dollarization will become the biggest trend in the future, it is still unpredictable. However, to save for the rainy days, we can reduce the harm brought by de-dollarization by diversifying our assets in different currencies.