Why Do Many Countries Implement Dedollarization?

[Suba]

Dedollarization refers to reducing a country's dependence on the US dollar (USD), often done gradually for global trade, foreign exchange reserves, and domestic finances. Many countries no longer fully use the USD as their foreign exchange reserves but instead use other currencies such as the Euro, Yen, Yuan, gold, Bitcoin, and others. Examples of countries that have implemented dedollarization include Argentina, Brazil, Cambodia, China, India, Indonesia, Iran, and Russia.

Although dedollarization by many countries cannot replace the USD as the global currency, it will at least reduce the USD's dominance in global transactions and strengthen the local currency against the USD.

 

[gwolf666]

From my perspective, dedollarization is a complex process with multiple implications. Although many countries are seeking to reduce their dependence on the US dollar, I believe it is not something that can be achieved overnight or without risks. The dollar has been the benchmark currency in international transactions for decades, and its stability and global acceptance make it difficult to replace quickly. However, I believe that the trend toward diversifying reserves and using other currencies or assets, such as the euro, yen, yuan, or even cryptocurrencies, can be beneficial for strengthening the local economy and reducing vulnerability to changes in US policy. Furthermore, this can promote greater economic sovereignty and stability in national finances. But I also believe that, in the process, nations must be cautious so as not to negatively impact liquidity and confidence in the international market.

 

[Fidelia]

For many countries, the dollar has so penetrated the economy such that simple transactions between two citizens of the country are negotiated and paid in dollars. Dedollarisation becomes necessary at this point.

 

[Augusta]

It is to help level the playing field for economies outside the U.S. However, countries also depend on having a stable currency to hold in reserve and conduct international business.