Russia’s leader claims Biden’s administration is weaponizing the USD and in turn destroying
the value.
Vladimir Putin asserts that the Biden administration is “killing” the USD by using it as a weapon,
claiming that America has suffered a “blow,” and that even its allies are now “downsizing” the
value of the currency.
After employing the dollar as a tool of foreign policy, President Joe Biden’s administration is
alleged to have “killed [it] with [its] own hands” by Russian President Vladimir Putin.
The Russian president stated: “The dollar is the cornerstone of the United States’ power… it is the
main weapon used by the U.S. to preserve its power throughout the world” in a recent and
extremely contentious discussion with Tucker Carlson.
“This American power was dealt a blow as soon as the political leadership decided to use the
dollar as a tool of political struggle.” Putin said that “even the U.S. allies are downsizing the
dollar in their reserves” to demonstrate the purported decrease in the dollar’s dominance. His
remarks were translated in real time from Russian to English.
Is the de-dollarization of this movement away from the US dollar as severe as Russia’s president
portrays it to be?
When nations stop using the dollar as a reserve currency, medium of exchange, or unit of
account, this phenomenon is known as “de-dollarization.” Any ideas that this is an issue have
been consistently rejected by the United States, which views it as a “natural desire [for countries]
to diversify” their economies.
As one of the original members of the BRICS alliance, which also includes China, India, Brazil,
South Africa, and many more emerging market nations, Russia is working to have significant
trade settlements settled in local currencies rather than US dollars. As nations work to lower
transaction costs, lessen their exposure to geopolitical risks and global volatility, and strengthen
their local economies, this movement is gaining traction.
The timing of the Russian president’s warning on the dollar is perfect. It occurs in the midst of
increased conjecture on the dollar’s status as the global reserve currency, largely because of the
country’s historically high $34 trillion debt load.
The IMF reports that since early 2016, the value of the US dollar as a percentage of the world’s
allotted foreign exchange reserves has decreased by about 6%.
The IMF reports that since early 2016, the value of the US dollar as a percentage of the world’s allotted foreign exchange reserves has decreased by about 6%.
Nonetheless, in the third quarter of 2023 (the most recent data set), the U.S. dollar continued to
account for 59.17% of the world’s allotted foreign exchange reserves; this stands in sharp contrast to the Chinese yuan’s 2.37% of reserves during the same period.
According to analysts at FXC Intelligence, de-dollarization is happening, but it is not happening quickly. This was mentioned in a report they just published on the subject.
Instead, it is expected to be a gradual process over the next few decades as nations switch to a wider variety of currencies, which will likely offer more protection against any geopolitical
shocks in the future.
