The ongoing tension between the two largest economies country china and USA which people are not taking serious now might cause an heavy threat to trade and our finance if care is not taken. The interest of dedollarization which known as reduction in the use of U.S dollar in the international market has been controversial, and giving people rest of mind if this is not going to lead to deglobalization in world trading and our personal finance as many countries are backing off from using Dollar as their trading currency 💲
We already see different countries like Brazil, Russia India South Africa, and China coming together to diversify their currency reserve BRISC and many are ready to follow the same steps in reducing dollar dependency. In my own view there are many factors to consider in this dedollarization of a thing, China want to be the biggest economies country, but their Yen is still backed by dollar, that is one point out of it. I know they've been buying gold lately to back their currency, in report from Gold market, China buying tons of Gold just to reduce dependency of dollar.
But that is not where I'm going,
To think about this dedollarization, we have to think far to what will happen in the future of finance, concerns about monetary matters, i know many still think this does not necessarily imply on deglobalization, but to me it can be a contributing factor to it and impact trade and finance.
In aspect of trading, US dollar has fascinated international trade by helping jn provides a widely use of exchanges eith dollar all over the world and to us it a good thing at least there is a particular currency that join every continent together. Then if dedollarization occurs, it could lead to volatility of our currency, and definitely if this will increase in transaction costs in international market. Just imagine if a countries start using their currency or alternative reserve currencies, businesses and traders will be affected in a way that they are going to face lot of complexities and high risks in cross border transaction, and the truth is that, it going to reduce international trading and global marketing.
Another way this dedollarization is going to impact the global market is that, if countries reduce the dominant of dollar there will be what we call liquidity instability that is, it going to reduce asset backed by dollar and that could cause damages to investors and which will result in individual adjusting their portfolio, especially crypto investors. They will need to diversifird on currency landscape
So, are we waiting for this reshape that will block global economic to emerge or trade barriers that I see approaching. Dedollarization will be a complex thing and will likely increase the manner of changing rules and mechanism for currency exchange which sure it going to possess negative effects on trade and finance.
Well, whether dedollarization or not, since we have blockchain technology, it going to provide an alternative frameworks for international trading and fiance through the use of cryptocurrency. Or what is your opinion on dedollarization and deglobalization ahead us.
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