- The dollar’s supremacy in global trade faces fresh challenges as several countries float plans to use local currencies in commerce.
- Russia and Iran are working to create a gold-backed stablecoin, while China is increasingly using the yuan in its oil trades.
- Here are 5 rising challenges to the greenback’s dominance of international trade and investment flows.
The dollar’s dominance of global trade and investment flows is facing a slew of new threats as many countries push plans to boost the use of alternative currencies.
Nations from China and Russia to India and Brazil are pushing for settling more trade in non-dollar units – with plans ranging from the use of local currencies to a gold-backed stablecoin and a new BRICS reserve currency.
For decades, the greenback has reigned supreme as the world’s reserve currency and is widely used in crossborder trade, especially for commodities such as oil. Thanks to its relative price stability, investors see it as a safe-haven asset in times of heightened economic and geopolitical uncertainty.
The dollar was further bolstered last year by a surge in US interest rates that made it attractive to foreign investors seeking higher yields. It surged 17% during the first nine months of 2022, but has since lost some of its shine on the prospect that the Federal Reserve may soon end its rate hikes as inflation cools rapidly.
Against this backdrop come the latest threats to the greenback’s reign — here are five currency projects from across the world that are ultimately aimed at undermining the dollar’s supremacy.