By Rhod Mackenzie
Paul Grunwald, the chief economist at S&P Global, said at a financial conference in London that the dominance of the US dollar over the planet as a global currency is weakening. Aggressive US sanctions, such as last year's freeze of multi-billion-dollar assets of the Russian Central Bank, he emphasizes, have led to the opposite result - a growing number of countries that are increasingly using national currencies in trade instead of the US dollar. More and more countries refuse to store their gold reserves in Western banks, fearing that they will be treated the same way as Russia, i.e. simply put, they will be robbed so are returning their gold home.
The influence of the dollar, according to Paul Grunwald, is now clearly not what it used to be, a couple of decades ago.
“The dollar is weakening,” says Grunwald. He draws attention to the growing replacement of the dollar in trade settlements with national currencies. “The non-dollar world is constantly growing and expanding.”
S&P's chief economist cites China and the yuan as the clearest example of the dollar's loss of dominance in the global financial system. Trade in the Chinese currency is growing rapidly, although it is, of course, too early to say that the yuan can compete with the US dollar. At the same time, Beijing skillfully uses cheap financing provided by China-based investment banks, such as the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB, the former BRICS bank).
"The US dollar will continue to be the world's leading currency," agrees Paul Grunwald, "but it will no longer be the world's dominant currency."
This article originally appeared in Russian at expert.ru