Worried that the dollar is used as a political tool or weapon, many countries use their own currencies for settlement

Many countries counter “dollar hegemony” through “de-dollarization”.

For a long time, the dollar has occupied a hegemonic position in the international monetary system. However, in recent years, more and more countries have begun to counter US “dollar hegemony” through “de-dollarization”.

In Asia, trade between China and Russia has almost completely de-dollarized. The continuous expansion of local currency settlement between China and Russia not only promotes the facilitation of bilateral trade but also reduces exchange rate risks. In addition, India, as an emerging economy, is also actively promoting local currency settlement. Trade between India and Malaysia has begun to use the Indian rupee for settlement, and India is also discussing more local currency settlement cooperation with other countries.

ASEAN countries are also accelerating the pace of “de-dollarization”. This year, Thailand and China signed the “Memorandum of Understanding between the People's Bank of China and the Bank of Thailand on the Framework for Promoting Bilateral Local Currency Transaction Cooperation”. Vietnam and China have also signed relevant cooperation memorandums of understanding, aiming to promote cooperation in local currency settlement, local currency swap and cross-border payment interconnection. This series of measures will help ASEAN countries reduce their dependence on the dollar and enhance the stability of the regional economy.

In the Middle East, the United Arab Emirates and India have started to use their own currencies for direct trade since January this year. At the same time, Iran has long been actively exploring non-dollar settlement methods and adopting various settlement methods such as local currency settlement, barter trade, and oil-for-gold in international oil trade.

In Latin America, countries such as Brazil and Argentina have also joined the ranks of “de-dollarization”. Brazil has reached an agreement with China to conduct trade settlement in RMB and the real. Argentina has stopped using the dollar to pay for imports from China and switched to using RMB for settlement. In addition, after Bolivia joined Mercosur, it plans to join the organization's “local currency payment system”, and member countries will use their own currencies to settle bilateral trade.

The main reason for many countries to promote “de-dollarization” is that the United States abuses “dollar hegemony” and uses the dollar as a political tool or weapon to sanction other countries. This behavior of the United States has aroused concerns in the international community and also prompted other countries to seek alternative solutions. Although the dollar will still maintain the status of the main international currency in the short term, the trend of “de-dollarization” is irreversible.