WASHINGTON DC – Cryptocurrencies and national currencies are real threats to the dollar’s hegemony in international financial transactions, experts say.
After World War II, national leaders gathered at what was called the Bretton Woods conferences. With Europe devastated and the urgent need to reorganize the business world, the US dollar has been established as the world currency and the basis for business and financial transactions.
The US and the dollar
Even with the end of dollar convertibility into gold in the 1970s, the US currency continues to have world currency status. While the dollar facilitated negotiations, it gave the United States great power.
“For Washington, the use of the dollar as a world currency is the main tool of economic and political use. By losing such a tool, Americans will lose a considerable part of their world hegemony and influence in world processes, such as the recent pressure on Russia, China and France. If trade is done without the dollar, countries may not listen to Washington,” Vladimir Bruter, an academic at the International Institute for Political-Humanitarian Research in Moscow, Russia, told RT.
The use of the dollar in trade wars ends up causing market instability, disparities in industrial sectors, as well as affecting countries not directly linked to such conflicts.
Alternatives and Challenges
Using a cryptocurrency in place of the dollar poses many challenges. According to Bruter, countries around the world should have equal positions, which could lead to some loss of state sovereignty.
In addition to cryptocurrencies, some countries trade in national currencies instead of the dollar.
“We, for example, already make 70% of our exports and 30% of our imports with the Eurasian Economic Union countries in rubles,” said President Putin.
Although getting rid of the dollar is not a simple task, Russia and China have already taken some measures to decolourize their trade. Financial authorities from both countries signed a non-dollar agreement in mutual business transactions. As such, trade between the two should be in both rubles and yuan.