The late August BRICS summit propelled the de-dollarization of the world economy back into the spotlight. Decreasing the frequency of the U.S. dollar in trade and financial transactions is not new. But it has been heavily circulated after the U.S. and its allies imposed sanctions on Russian dollar reserves following its war with Ukraine. The topic was repeatedly referenced by world leaders in attendance in South Africa. Brazilian President Luiz Inacio Lula da Silva even called for a new common currency for the BRICS bloc.
The past ten years have shown the currency has so far defended the major role it plays in international markets. The U.S. share of global GDP stands at around 25 percent. The country’s share in global trade in commodities and commercial services is lower, at around 10 percent.
Still, the United States’ importance in global capital markets and international debt, means that the dollar continues to play a key role internationally, according to Reuters.
In July, international SWIFT payments in U.S. dollars hit a new all-time high of 46.5 percent of all payments, up more than 13 percentage points since December 2012. The Chinese yuan also reached a new high – albeit at just 3 percent of all international payments.
The Yuan has been more successful in foreign reserves. Here, the U.S. dollar has lost 2.5 percentage points in 10 years and 7.5 percentage points in 20. Meanwhile, the Yuan climbed from 1.1 percent of international foreign reserves at the end of 2016 to currently 2.6 percent.
When it comes to foreign exchange transactions, the dollar held over an 88 percent share in 2022.
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Gold is precious in de-dollarization fight
China’s central bank has been stockpiling gold for the 10th month in a row. The world’s second-largest economy is trying to move away from its reliance on dollar reserves.
China’s central bank extended its gold-buying spree to the 10th straight month as the world’s second-largest economy seeks to move away from its reliance on dollar reserves.
The People’s Bank of China’s stockpile of the precious metal climbed by 29 tons in August to 2,165 tons, Bloomberg reported. Nearly 217 tons were added over the last 10 months, it said.
China lowered its holdings of Treasurys to a 14-year low last June.
According to a May World Gold Council report 62% of central banks estimate that Gold will make up a greater share of reserves in the next five years.
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