Russian President Vladimir Putin underlined the shrinking role of the US dollar in cross-border trade and alluded to Russia’s increasing use of national currencies in its economic relations with China and other countries . With over 80% of its trade with China conducted in rubles and yuan and the ruble involved in 90% of trade within the Eurasian Economic Union Russia is setting an example for other nations who are in the search for alternatives to the dollar .
End of Dollar Hegemony: Growing Momentum for Regional Currencies
Notable developments in regional currency projects are also contributing to the declining influence of the dollar . Putin welcomed Brazil and Argentina’s proposal for a common currency in South America while Algerian President Abdelmadjid Tebboune expressed his country’s interest in joining the BRICS organization and potentially adopting a common currency in the Arab world . These initiatives reflect a desire to reduce reliance on dominant currencies and create a more balanced international financial system .
The Shift Towards a Multipolar World Order
The wearing away of the Washington consensus and the rise of multipolarity are evident in the alliances formed by Russia and China . The Shanghai Cooperation Organization which represents around 30% of global GDP and the BRICS which encompasses 40% of the world’s population are powerful groupings challenging the traditional dominance of Western institutions . It is anticipated that regional reserve currencies will emerge under the umbrella of BRICS alongside the establishment of new international institutions that will rival the existing ones .
Final Thoughts
Putin’s remarks signify a shifting global landscape where the US dollar’s supremacy is being challenged . The increasing use of national currencies in cross-border trade and the emergence of regional currency initiatives hint a desire for a more balanced and diversified global financial system . As nations want to reduce their dependence on the dollar the future may hold new international institutions and reserve currencies under the influence of rising powers like Russia and China .
