De-dollarization: Is it really happening?
De-dollarization, the decline of the United States dollar as the world’s dominant reserved currency, is underway, and it’s gaining momentum.
For over 100 years, the U.S. dollar has been the world reserve currency, which means it has been the dominant foreign currency held by central banks to carry out international transactions and settle international debt.
However, in the last 20 years, the dollar’s dominance in countries’ reserves has decreased from 70% to under 60%, according to the International Monetary Fund.
This trend has been accelerating since last year, when the U.S. and its allies froze Russia’s dollar reserve as a response of the country’s invasion of Ukraine.
Since then, several countries have been looking for alternatives to the U.S. dollar. Some are discussing the creation of new currencies for international trade, while others are buying an increasing amount of gold to diversify their reserve.
Bitcoin (BTC), a nascent asset with many of the characteristics of gold, may also benefit from this trend in the long run.
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