Jakarta –
The world is busy with the term dedollarization as a result of the United States using the dollar as a weapon in the war between Ukraine and Russia. Other countries began to choose other currencies for transaction needs. Actually, what is dedollarization?
Dedollarization is the process of replacing the dollar as the currency used for oil trade to bilateral trade agreements.
Until now, the dollar is the dominant currency used in international trade. This makes any economic policies issued by The Fed, the central bank of the United States, always have an impact on global conditions.
The beginning of the dollar becoming the dominant currency in the world dates back to World War II. Here’s the history of dollar domination.
Early Start of Dollar Dominance
The US dollar was first printed in 1914. Ten years after the Federal Reserve institution that became the standard for world central banks printed the 10 dollar bill, the dollar officially became the global currency.
The dollar’s fame as a global currency only became known in 1944, coinciding with World War II. At that time, countries were trying to find an exchange rate system that could not harm anyone.
Finally, at a meeting of 44 allied countries, the dollar was agreed to be the value of their currency, as explained in Antara.
5 Candidate Currency Substitute Dollars
Towards dedollarization, there are 5 potential currencies to replace the US currency. Launching from CNBC Indonesia, here is the list:
1. Euro
Euro currency is used by 20 major European countries, such as Germany, France, Italy, Spain and the Netherlands. It is recorded that 66.1% of trade in Europe uses the Euro.
2. Yuan
Yuan is the currency of China. With considerable economic strength, this country with a population of more than one billion people has the potential to place its currency in global trade.
3. The BRICS currency
The BRICS alliance nations are also preparing to ditch the US dollar and European euro for interstate trade. BRICS is a combination of five countries, namely Brazil, Russia, India, China and South Africa.
4. Rupee India
India has issued a new policy to further increase the use of rupees in their trade since April 2023. India has highlighted its currency with a number of countries, such as Malaysia and the United Arab Emirates (UAE).
5. ASEAN local currency
ASEAN countries are also not left behind with the de-dollarization plan. Local currency transactions (LCT) have been signed to push their respective local currencies on the global market.
Indonesia, Thailand, Malaysia, Singapore and the Philippines agreed to cooperate in cross-border payment transactions via QR codes, fast payments, data, to local currency transactions.
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(nir/nwk)
