GLOBAL ECONOMY OP-ED: Brazil and Argentina’s common currency ambitions highlight renewed de-dollarisation desires

Talk of de-dollarisation — and putting an end to the dollar’s hegemony — has been doing the rounds for decades, but recent economic and geopolitical developments have again highlighted the momentum building against the dollar’s dominance as the reserve and payment currency of the world. The dollar’s massive appreciation last year didn’t help its cause.

More recently, the governments of Brazil and Argentina announced their intention to create a common currency, a prospect that was greeted with a great deal of scepticism internationally because their economies are in such vastly different states. Yet, so far, Barry Eichengreen, a professor of economics and political science at the University of California, Berkeley, told a Brookings Institution roundtable, there has only been “a very gradual, almost glacial decline” in the dollar’s role as a reserve currency and global means of exchange.

But there are several forces at play that increase the likelihood of the dollar losing its supremacy and, if history repeats itself, it could take as little as five years for an alternative reserve currency to overtake the previous incumbent . The dollar’s ascendancy, admittedly, had been decades in the making, but when the tipping point was reached the seismic shift in the global financial system was swift.

Source: Financial Digest (financialdigest.net)

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