King Dollar Has These 8 Powers, Dedollarization Will Fail

Jakarta, CNBC Indonesia -SThe United States (US) ‘King Dollar’ status is becoming a hot ball. This is because more and more countries want to shift the US dollar as the “King of Currency” and at the same time dim it super powers his.

The US dollar has been the ‘ruler’ of the world since the 1920s by shifting the British pound. Until now, the dollar is the dominant currency used in international trade.

based on data The International Monetary Fund (IMF) notes that the share of US dollar-denominated global foreign exchange reserves has fallen sharply from 71% in 2000 to 58.36% in 2022.

Even though it has decreased, in fact the share of the US dollar is still relatively large compared to other countries.

This makes any economic policies issued by The Fed, the central bank of the United States, always have an impact on global conditions. However, the issue of de-dollarization has surfaced because many trades are now using currencies other than dollars.

However, de-dollarization is not that easy. De-dollarization will require a broad and complex network of exporters, importers, currency traders, debt issuers, and lenders to independently decide to use another currency.

According to BIS data, the dollar is on one side of nearly 90% of global forex transactions, representing an estimated US$6.6 trillion by 2022. About half of all foreign debt is in dollars, and half of all global trade is billed in dollars.

Therefore, there is no mechanism to get banks, companies and governments to change their behavior at the same time.

There are at least eight reasons why the US dollar is so powerful. Among them the large portion of the US dollar in bonds that exist around the world, the extent of use of the dollar in trade. the large share of the US Gross Domestic Product (GDP) to the world, and cross-border loans.

Also, the magnitude of the use of dollars in interbank network payments through the system SWIFT or Society for Worldwide Interbank Financial Telecommunication.

The following is evidence of eight US dollar strengths that are difficult to replace by other currencies:

While there may not be a single successor to the dollar, the proliferation of alternatives could create a divided world going forward as there is some international commerce that already uses currencies other than the dollar.

But looking at its 8 strengths, getting rid of the dollar will take a long time and a complex system, not any time soon.

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