Summary:
Discover what countries dropped the US Dollar in global trade and why this de-dollarisation trend is gaining momentum in 2025.
As of May 2025, many countries have taken steps to reduce or eliminate their reliance on the US dollar in international trade and finance. This global shift, known as de-dollarisation, is driven by various economic, political, and strategic factors.
This movement is reshaping international trade, finance, and geopolitical alliances. In this comprehensive analysis, we delve into what countries dropped the US Dollar, their motivations, and the broader implications for the global economy.
De-dollarisation refers to the process by which countries reduce their dependence on the US dollar for international transactions, reserves, and trade settlements.
This shift is often motivated by a desire to achieve greater economic sovereignty, mitigate exposure to US monetary policy, and circumvent potential sanctions.
Motivations Behind De-Dollarisation
1. Economic Sanctions and Political Pressure
Countries like Russia and Iran have faced extensive US sanctions, prompting them to seek alternatives to the dollar to safeguard their economies. By conducting trade in local currencies or other major currencies, they aim to reduce the impact of such sanctions.
2. Diversification of Foreign Exchange Reserves
Central banks are diversifying their reserves to include a mix of currencies, such as the euro, Chinese yuan, and gold, to mitigate risks associated with holding large amounts of US dollars.
3. Development of Alternative Payment Systems
To decrease dependence on US-controlled financial systems like SWIFT, nations are creating their own payment infrastructures. For example, Russia has launched the System for Transfer of Financial Messages (SPFS), while China has developed the Cross-Border Interbank Payment System (CIPS).
4. Emergence of Digital Currencies
The rise of central bank digital currencies (CBDCs) offers countries a new avenue to conduct international transactions without the US dollar. China's digital yuan is a prominent example, and other nations are exploring similar initiatives.
1. Commonwealth of Independent States (CIS) Nations
A collective of former Soviet republics has taken decisive steps to diminish the US dollar's role in their economies:
Russia: In response to extensive US sanctions, Russia has accelerated its de-dollarisation efforts, promoting the use of the ruble and other currencies in trade.
Belarus, Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan, Ukraine: These nations are shifting towards local currencies and alternative financial systems to enhance economic sovereignty and reduce exposure to US policies.
2. BRICS Nations and New Entrants
The BRICS bloc—comprising Brazil, Russia, India, China, and South Africa—has been at the forefront of de-dollarisation:
China: Promoting the yuan in international trade and establishing currency swap agreements to facilitate transactions without the dollar.
India and Brazil: Exploring bilateral trade agreements in local currencies to reduce dollar dependence.
In 2025, BRICS expanded to include:
Indonesia, Malaysia, Thailand: Southeast Asian nations seeking greater financial autonomy.
Algeria, Belarus, Bolivia, Cuba, Kazakhstan, Nigeria, Turkey, Uganda, Uzbekistan: Countries aiming to diversify their economic partnerships and reduce reliance on Western financial systems.
1. Shift in Global Financial Power
The gradual move away from the dollar could lead to a more multipolar financial system, with multiple currencies playing significant roles in global trade and finance.
2. Impact on the US Economic Influence
Reduced demand for the dollar may affect the US's ability to finance its deficits and could lead to higher borrowing costs. Additionally, the effectiveness of US sanctions may diminish as countries develop alternative systems.
3. Increased Currency Volatility
As countries transition to alternative currencies, exchange rate volatility may increase, impacting international trade and investment flows.
Strategies for Investors
Diversify Currency Exposure: Consider investments in assets denominated in many currencies to hedge against dollar depreciation.
Monitor Emerging Markets: Stay informed about economic developments in countries leading de-dollarisation efforts, as they may present new investment opportunities.
In conclusion, de-dollarisation is gaining momentum in 2025, with several countries actively reducing their reliance on the US dollar.
As countries seek greater financial autonomy and resilience, the dominance of the US dollar faces unprecedented challenges, with this shift having the potential to reshape the global landscape in the coming years.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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