De-Dollarization 'Could Happen Much Quicker Than Most Think'

Sanctions and trade embargoes have accelerated the movement of many nations, including Russia, to boost efforts to shed reliance on the US dollar, which has been increasingly "weaponized" by the West. Recent moves by BRICS countries offer hope that the dominance of the greenback in the world economy will eventually be uprooted.

De-dollarization could happen much quicker than most people think, Michael Goddard, president of the Netley Group, said at the St. Petersburg International Economic Forum (SPEIF).

SPIEF 2023 entered day two on Thursday, and the unique global economic and business event focused on de-dollarization - a buzzword of late among countries seeking to ditch the hegemony of the American greenback. The BRICS group of countries has been spearheading the movement. A common currency is one of the bold steps being mulled over among other tools that the bloc, which unites the world's largest developing economies — Brazil, Russia, India, China, and South Africa, has at its disposal to escape the hegemony of the US-dominated economic order.

As a number of other countries have expressed desire to join the bloc, including Argentina, Iran, Indonesia, Turkiye, Saudi Arabia, and Egypt, the trend towards dumping the dollar is likely to grow even stronger.

"A new BRICS currency that's backed by some kind of asset, gold or a basket of assets, as they're discussing, from a trade basis, if all the BRICS countries and BRICS+ and others trade that way [it] will almost immediately depress the amount of dollars that are used in trade. And over a period of a few years, that will accelerate greatly,” Michael Goddard told Sputnik.

However, he clarified that that if one nurtures hopes of ditching the dollar, which is the global reserve currency, you “actually need reserve.” The tremendous advantage of the dollar at the moment is the US bond market, Goddard said, adding:

"One of the ways for the BRICS to replicate that, and then displace it, is to link their bond markets, and the governments and the populace actually start to buy the bonds which are denominated in the new currency. And I believe that if they do that, de-dollarization could happen much quicker than most people think."

To all those skeptics of the BRICS currency who warn of the vast differences of the economies of member-states, Michael Goddard enumerated ways that this "divide" could be overcome successfully. One way is for BRICS to create a currency "backed either by gold or a basket of commodities that are trusted," and then "trade with 80 percent of the world."

"And I believe that most people who are not in America, the UK, or Europe, would like an alternative to the dollar, don't want to be at risk from being sanctioned, their assets being frozen. And I think the momentum of that will actually allow the currency to take root and then grow," Goddard concluded.

Whether it’s the BRICS members, or other countries, or even Washington’s current allies, they need to realize that at any moment, the United States can and will wield the dollar as a sanctions tool against them if they are bold enough to oppose their foreign policy, Sergey Vakhrukov, deputy secretary of the Security Council of the Russian Federation, warned.

Anyone who does not want to fall in line with Washington’s direct instructions can face various sanctions and prohibitions, which could seriously affect the economy, Sergey Vakhrukov told Sputnik on the sidelines of SPIEF 2023. Specifically, this might bring restrictions on dollar liquidity, settlements issues, restrictions on trade, and a huge amount of problems linked with imposed sanctions, he said. This threat also exists for American allies, as it is becoming economically unprofitable for many to constantly be in the chokehold of US policy, adding that the recession in Europe is a vivid example.

So the order of the day is to focus on boosting sovereignty, interaction based on national interests, mutually beneficial contacts, rejecting attempts to constantly impose someone else’s rules through the issuance of dollars, Vakhrukov underscored.

As many today have already grasped this, the process of de-dollarization is proceeding very dynamically, said the deputy secretary of Russia's Security Council.

If two countries interact, trade, etc., why does one need the mediation of another instrument, which is only a unit of account, Dmitry Zaitsev, auditor at the Accounts Chamber of the Russian Federation, speculated. A BRICS currency as an alternative to the dollar could be a useful mechanism to try out, he agreed, but advised broadening the search to include other tools as well.

This is precisely what multipolarity, a multicentric approach call for, Dmitry Zaitsev emphasized.