The future is crystal clear: the dollar dominance is going to be a thing of past. But what could be the geoeconomics scenario in the post dollar world. Here are some of my thoughts:
Dollar is at present the reserve currency with 58% holdings where the globe deposits in US Federal Reserve and in US Treasuries. As regards to trading and exchange dollar is perched at 88% of the global market. Key reason for this dominance is the US clout in geopolitics, geoeconomics, geostrategy and geotechnology areas. This dominance began in and around 1945 and has lasted until now. Today the Global South is challenging US leadership in every angle of the Geo-spectrum.
Post dollar, the scenario changes from US as the supremo to one of ‘also ran’’. Whereas the dollar is not going away into sunset that easily and early too, slowly and steadily the Global South begins to chip away the tentacles of the US Octopus. As this gets accelerated US finds in troubled waters due to the following geoeconomics pivots:
· Easy access to global markets get depleted
· Borrowing cost for US spirals up
· Reserve status of dollar gets diluted
· Printing of US currency stalls
· Finally stock market valuation across the board in New York plunges
The narrative changes from fiat currency to those backed by gold, commodities and energy & mineral resources. Introduction of these asset based currencies include OPEC+ currency backed by the oil cartel, Russian Ruble backed by gold and Chinese Yuan backed by rear earth.
Another aspect that would prevail in the coming years is the common currency of BRICS+ backed by the basket of currencies of the present 11 members and the future additions to BRICS+ in the coming years.
Yet another disruptive geoeconomics weapon is the digital yuan that is already making inroads into several countries in Asia and is expected to be adopted in Middle East & North Africa Countries (MENA) by the next decade 2030 to 2039.
Contrary to the popular nation that the Global South would mount a direct offensive on US dollar, the group supported by BRICS+ and OPEC+ would target the present users of dollar to switch on to their own currencies by offering wide ranging incentives. These would include economic development programmes in the BRI format, security & defence alliance as well as facilitating the “use now pay later” for imports of finished products from the major economies in the Global South.
Put it simply, the new geoeconomics strategy would be incentivising the current users of dollar who are addicted to it, to ditch it step by step rather than compelling them to shun US dollar altogether!
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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