Dedollarisation is a process of substituting

US dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...

as the

currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general ...

used for (i) trading oil and/ or other commodities (i.e.

petrodollar Petrodollar recycling is the international spending or investment of a country's revenues from petroleum exports ("petrodollars"). It generally refers to the phenomenon of major petroleum-exporting states, mainly the OPEC members plus Russi ...

), (ii) buying

US dollars The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...

for the forex reserves, (iii)

bilateral trade agreement A trade agreement (also known as trade pact) is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them trade with each other. The most common t ...

s, and (iv) dollar-denominated assets. The

U.S. dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...

began to displace the

pound sterling Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound ( sign: £) is the main unit of sterling, and ...

as international

reserve currency A reserve currency (or anchor currency) is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. The reserve currency can be used in international tr ...

from the 1920s since it emerged from the

First World War World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...

relatively unscathed and since the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

was a significant recipient of wartime gold inflows. After the U.S. emerged as an even stronger global

superpower A superpower is a state with a dominant position characterized by its extensive ability to exert influence or project power on a global scale. This is done through the combined means of economic, military, technological, political and cultural ...

during the

Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposi ...

, the

Bretton Woods Agreement The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreement. The Bretto ...

of 1944 established the post-war international monetary system, with the U.S. dollar ascending to become the world's primary

for international trade, and the only post-war currency linked to gold at $35 per

troy ounce Troy weight is a system of units of mass that originated in 15th-century England, and is primarily used in the precious metals industry. The troy weight units are the grain, the pennyweight (24 grains), the troy ounce (20 pennyweights), and th ...

. Despite all links to gold being severed in 1971, the dollar continues to play this role to this day. Since the establishment of

Bretton Woods system The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreement. The Bretto ...

, the US dollar is used as the medium for international trade. The

United States Department of the Treasury The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and ...

exercises considerable oversight over the SWIFT financial transfers network, and consequently has a huge sway on the global

financial transaction A financial transaction is an Contract, agreement, or communication, between a buyer and seller to exchange goods, Service (economics), services, or Asset, assets for payment. Any transaction involves a change in the status of the finances of two ...

s systems, with the ability to impose sanctions on foreign entities and individuals. In recent years, several countries are transitioning to trade in national currencies.

Devaluation of the dollar

Under the

established after

World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...

, the value of gold was fixed to $35 per ounce, and the value of the U.S. dollar was thus anchored to the value of gold. Rising government spending in the 1960s, however, led to doubts about the ability of the United States to maintain this convertibility, gold stocks dwindled as banks and international investors began to convert dollars to gold, and as a result, the value of the dollar began to decline. Facing an emerging

currency crisis A currency crisis is a type of financial crisis, and is often associated with a real economic crisis. A currency crisis raises the probability of a banking crisis or a default crisis. During a currency crisis the value of foreign denominated deb ...

and the imminent danger that the United States would no longer be able to redeem dollars for gold, gold convertibility was finally terminated in 1971 by President Nixon, resulting in the " Nixon shock". The value of the

was therefore no longer anchored to gold, and it fell upon the Federal Reserve to maintain the value of the U.S. currency. The Federal Reserve, however, continued to increase the money supply, resulting in

stagflation In economics, stagflation or recession-inflation is a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actio ...

and a rapidly declining value of the U.S. dollar in the 1970s. This was largely due to the prevailing economic view at the time that inflation and real economic growth were linked (the

Phillips curve The Phillips curve is an economic model, named after William Phillips hypothesizing a correlation between reduction in unemployment and increased rates of wage rises within an economy. While Phillips himself did not state a linked relationship ...

), and so

inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...

was regarded as relatively beginning. Between 1965 and 1981, the

lost two thirds of its value.

Central bank reserves

According to the IMF's Currency Composition of Official Foreign Exchange Reserves (COFER) survey the share of reserves held in U.S. dollars by central banks fell from 71 percent in 1999 to 59 percent in 2021.

Regional developments

On March 17, 2022,

Anatoly Aksakov Anatoly Gennadyevich Aksakov (russian: Анатолий Геннадьевич Аксаков; born 28 November 1957 in Yermolayevo) is a Russian politician and economist. He is a member of the Russian State Duma from the A Just Russia party. ...

, Chairman of the State Duma Committee on the Financial Market, announced that the

Bank of Russia The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...

and the

People's Bank of China The People's Bank of China (officially PBC or informally PBOC; ) is the central bank of the People's Republic of China, responsible for carrying out monetary policy and regulation of financial institutions in mainland China, as determined by ...

are working on connecting the Russian and Chinese financial messaging systems. He also pointed to the beginning of the development of information transfer schemes using blockchains, including the digital ruble and the

digital yuan Digital renminbi ( zh, 数字人民币; also abbreviated as digital RMB and e-CNY), or Digital Currency Electronic Payment (DCEP, ), is a central bank digital currency issued by China's central bank, the People's Bank of China. It is the first digi ...

. On March 31, 2022, the Economic Times published information that India has offered Russia a new transaction system with the transfer of trade to the ruble and SPFS, which will work through the

Reserve Bank of India The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. It is responsible f ...

and Russia's

Vnesheconombank VEB.RF, or VEB (russian: ВЭБ.РФ (ex-Vnesheconombank)), is a Russian state development corporation. It was founded in 2007 as a development institute. VEB.RF is an investment company and development institute in Russia. It has financed more t ...

. According to the same data, the system will be put into operation within a week.

Australia

On 2013,

Australia Australia, officially the Commonwealth of Australia, is a sovereign country comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands. With an area of , Australia is the largest country by ...

made an agreement with

China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's List of countries and dependencies by population, most populous country, with a Population of China, population exceeding 1.4 billion, slig ...

to trade in national currencies.

Brazil

On 2013, during the BRICS summit,

Brazil Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...

made an agreement with China to trade in

Brazilian real The Brazilian real ( pl. '; sign: R$; code: BRL) is the official currency of Brazil. It is subdivided into 100 centavos. The Central Bank of Brazil is the central bank and the issuing authority. The real replaced the cruzeiro real in 1994 ...

and Chinese yuan

China

Since 2011,

is gradually shifting from trade in

and in favour of

Chinese yuan The renminbi (; symbol: ¥; ISO code: CNY; abbreviation: RMB) is the official currency of the People's Republic of China and one of the world's most traded currencies, ranking as the fifth most traded currency in the world as of April 2022. ...

. It made agreements with Australia, Russia, Japan, Brazil, and Iran to trade in national currencies. It has been reported that in the first quarter of 2020 the share of the dollar in the bilateral trade between China and Russia fell below 50 percent for the first time. In 2015, China launched CIPS, a payment system which offers clearing and settlement services for its participants in cross-border

Renminbi The renminbi (; symbol: ¥; ISO code: CNY; abbreviation: RMB) is the official currency of the People's Republic of China and one of the world's most traded currencies, ranking as the fifth most traded currency in the world as of April 202 ...

payments and trade as an alternative to

SWIFT Swift or SWIFT most commonly refers to: * SWIFT, an international organization facilitating transactions between banks ** SWIFT code * Swift (programming language) * Swift (bird), a family of birds It may also refer to: Organizations * SWIFT, ...

. In December 2022 at

- GCC Summit, Chinese President

Xi Jinping Xi Jinping ( ; ; ; born 15 June 1953) is a Chinese politician who has served as the general secretary of the Chinese Communist Party (CCP) and chairman of the Central Military Commission (CMC), and thus as the paramount leader of China, ...

called for Oil trade payments to be settled at yuan. Foreign Minister Wang Yi stated that Chineses Arab Relation as an "historic improvement"

Egypt

In May 2022, Egyptian Minister of Finance Mohamed Maait announced the intention to issue bonds in yuan to raise capital as an mechanism to diversify the sources of finance.

European Union

Since the end of 2019, the EU countries established

INSTEX The Instrument in Support of Trade Exchanges (INSTEX) is a European special-purpose vehicle (SPV) established on 31 January 2019. Its mission is to facilitate non-USD and non-SWIFT transactions with Iran to avoid breaking U.S. sanctions. Five E ...

, a European

special-purpose vehicle A special-purpose entity (SPE; or, in Europe and India, special-purpose vehicle/SPV; or, in some cases in each EU jurisdiction, FVC, financial vehicle corporation) is a legal entity (usually a limited company of some type or, sometimes, a limited ...

(SPV) to facilitate non-

USD The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...

and non-

transactions with Iran to avoid breaking

U.S. sanctions After the failure of the Embargo Act of 1807, the federal government of the United States took little interest in imposing embargoes and economic sanctions against foreign countries until the 20th century. United States trade policy was entire ...

. On 11 February 2019, Russian deputy foreign minister

Sergei Ryabkov Sergei Alexeyevich Ryabkov (russian: Сергей Алексеевич Рябков) (born 8 July 1960) is a Russian politician, currently serving as the Deputy Foreign Minister of the Russian Federation since 2008. Early life and education Rya ...

stated that Russia would be interested in participating in INSTEX. In April 2022, Four European gas companies made trade payment settlements in

roubles The ruble (American English) or rouble (Commonwealth English) (; rus, рубль, p=rublʲ) is the currency unit of Belarus and Russia. Historically, it was the currency of the Russian Empire and of the Soviet Union. , currencies named ''ru ...

Ghana

On 24 November 2022, Vice President

Mahamudu Bawumia Mahamudu Bawumia (born 7 October 1963) is a Ghanaian economist and former central banker who serves as the 5th Vice President of Ghana in the 4th Ghanaian Republic. He assumed office on 7 January 2017 as Vice President of Ghana. Bawumia was a D ...

stated that they are working to buy Oil in Gold and he added "The barter of gold for oil represents a major structural change"

India

Before 1991

Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen nationa ...

and

India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area, the List of countries and dependencies by population, second-most populous ...

traded in rupee-ruble exchange during Cold War as both belong to this block. Mutual trading between

and

Russia Russia (, , ), or the Russian Federation, is a transcontinental country spanning Eastern Europe and Northern Asia. It is the largest country in the world, with its internationally recognised territory covering , and encompassing one-ei ...

is done mostly in

rubles The ruble (American English) or rouble (Commonwealth English) (; rus, рубль, p=rublʲ) is the currency unit of Belarus and Russia. Historically, it was the currency of the Russian Empire and of the Soviet Union. , currencies named ''rub ...

and rupees instead of

dollar Dollar is the name of more than 20 currencies. They include the Australian dollar, Brunei dollar, Canadian dollar, Hong Kong dollar, Jamaican dollar, Liberian dollar, Namibian dollar, New Taiwan dollar, New Zealand dollar, Singapore dollar, ...

s and

euros The euro (symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . Th ...

In March 2022,

and

entered for a Rupee - Ruble Trade Arrangement In December 2022, Sri Lanka and

Mauritius Mauritius ( ; french: Maurice, link=no ; mfe, label= Mauritian Creole, Moris ), officially the Republic of Mauritius, is an island nation in the Indian Ocean about off the southeast coast of the African continent, east of Madagascar. It ...

started using Rupee for trading internationally. Tajikistan, Cuba, Luxembourg and Sudan have also shown interest to use this mechanism.

Iran

In March 2018,

started buying oil in gold-backed yuans. On 31 March 2020, the first Iran-EU INSTEX transaction was concluded. It covered an import of medical equipment to combat the

COVID-19 Coronavirus disease 2019 (COVID-19) is a contagious disease caused by a virus, the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The first known case was identified in Wuhan, China, in December 2019. The disease quick ...

outbreak in Iran. In July 2022,

and

Iran Iran, officially the Islamic Republic of Iran, and also called Persia, is a country located in Western Asia. It is bordered by Iraq and Turkey to the west, by Azerbaijan and Armenia to the northwest, by the Caspian Sea and Turkmeni ...

made modifications in their

Bilateral trade Bilateral trade or clearing trade is trade exclusively between two states, particularly, barter trade based on bilateral deals between governments, and without using hard currency for payment. Bilateral trade agreements often aim to keep trade def ...

to reduce the dependency of

. The new monetary system could mean the debts can be settled in their own countries and could reduce the demand for

by 3billion a year

Japan

On 2011,

Japan Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the n ...

made an agreement with China to trade in national currencies. Sino-Japanese trade had an worth of US$300 billion.

Kazakhstan

On December 24, 2015,

Kazakhstan Kazakhstan, officially the Republic of Kazakhstan, is a transcontinental country located mainly in Central Asia and partly in Eastern Europe. It borders Russia to the north and west, China to the east, Kyrgyzstan to the southeast, Uzbeki ...

Government and National bank announced plans reduce dollarisation and strengthen national currencies. The joint statement of Kazakhstan government and national bank stated that their intent is to strengthen national currency rather than focus on eliminating

On 2016 after

surged to 6 year high, Kazakhstan Central bank Governor stated that it is the necessity to kick start de-dollarisation

Myanmar

In September 2022, Chairman of State Administration Council

Min Aung Hlaing Min Aung Hlaing ( my, မင်းအောင်လှိုင် abbreviated: MAL ; born 3 July 1956) also known as Alaungsithu is a Burmese politician and army general who has ruled Myanmar as the chairman of the State Administration Co ...

stated that they are planning to reduce

reliance and to include trade in other Foreign currencies. Apart from this there had been discussion to use Mir Payments system for payments

Russia

accelerated the process of dedollarisation in 2014 as a result of worsening relations with the West. In 2017, SPFS, a Russian equivalent of the

financial transfer system, was developed by the

Central Bank of Russia The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...

. The system had been in development since 2014, after the United States government threatened to disconnect Russia from the SWIFT system.

Lukoil The PJSC Lukoil Oil Company ( stylized as LUKOIL or ЛУКОЙЛ in Cyrillic script) is a Russian multinational energy corporation headquartered in Moscow, specializing in the business of extraction, production, transport, and sale of petrol ...

, a state-owned company, had announced that it will find a replacement for the dollar. In June 2021, Russia stated it will eliminate the dollar from its National Wealth Fund to reduce vulnerability to Western sanctions just two weeks before President

Vladimir Putin Vladimir Vladimirovich Putin; (born 7 October 1952) is a Russian politician and former intelligence officer who holds the office of president of Russia. Putin has served continuously as president or prime minister since 1999: as prime min ...

held his first summit meeting with U.S. leader Joe Biden. On March 23, 2022, Vladimir Putin signed an order forbidding "non-friendly" countries (including EU countries, USA and

) from buying Russian gas in any other currency besides

Russian ruble ''hum''; cv, тенкĕ ''tenke''; kv, шайт ''shayt''; Lak: къуруш ''k'urush''; Mari: теҥге ''tenge''; os, сом ''som''; tt-Cyrl, сум ''sum''; udm, манет ''manet''; sah, солкуобай ''solkuobay'' , name_ab ...

in the wake of sanctions given in aftermath of

2022 Russian invasion of Ukraine On 24 February 2022, in a major escalation of the Russo-Ukrainian War, which began in 2014. The invasion has resulted in tens of thousands of deaths on both sides. It has caused Europe's largest refugee crisis since World War II. A ...

In September 2022,

Gazprom PJSC Gazprom ( rus, Газпром, , ɡɐzˈprom) is a Russian majority state-owned multinational energy corporation headquartered in the Lakhta Center in Saint Petersburg. As of 2019, with sales over $120 billion, it was ranked as the large ...

CEO Alexei Miller said that they have signed an agreement to make trade payments in

Roubles The ruble (American English) or rouble (Commonwealth English) (; rus, рубль, p=rublʲ) is the currency unit of Belarus and Russia. Historically, it was the currency of the Russian Empire and of the Soviet Union. , currencies named ''ru ...

and Yuans instead of

In November 2022, Russian Deputy Prime Minister Aleksandr Novak said that all gas supplied to

via

Siberia Siberia ( ; rus, Сибирь, r=Sibir', p=sʲɪˈbʲirʲ, a=Ru-Сибирь.ogg) is an extensive geographical region, constituting all of North Asia, from the Ural Mountains in the west to the Pacific Ocean in the east. It has been a part ...

are settled in yuan and

had been planning to buy more Yuan at

Foreign exchange market The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all as ...

in the year 2023 for trade settlements.Russian Finance ministry and

Central bank of Russia The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...

stated that it would sell around 54.5 billion

in foreign currency from January 2023

Saudi Arabia

In March 2022, multiple reports claimed that

Saudi Arabia Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in Western Asia. It covers the bulk of the Arabian Peninsula, and has a land area of about , making it the fifth-largest country in Asia, the second-largest in the Ara ...

was in talks with

about trading Saudi oil and gas to China in

s instead of

dollars Dollar is the name of more than 20 currencies. They include the Australian dollar, Brunei dollar, Canadian dollar, Hong Kong dollar, Jamaican dollar, Liberian dollar, Namibian dollar, New Taiwan dollar, New Zealand dollar, Singapore dollar, U ...

Turkey

On August 5, 2022, Turkey and Russia agreed to partially trade natural gas for rubles.

Venezuela

In August 2018,

Venezuela Venezuela (; ), officially the Bolivarian Republic of Venezuela ( es, link=no, República Bolivariana de Venezuela), is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in th ...

declared that it would price its oil in

, yuan,

, and other currencies.

Zimbabwe

After an year of the introduction of a

RTGS Dollar RTGS may refer to: *Real-time gross settlement Real-time gross settlement (RTGS) systems are specialist funds transfer systems where the transfer of money or securities takes place from one bank to any other bank on a "real-time" and on a " gros ...

had been the only

legal tender Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in ...

, Zimbabwe switched to

Dollarization Currency substitution is the use of a foreign currency in parallel to or instead of a domestic currency. The process is also known as dollarization or euroization when the foreign currency is the dollar or the euro, respectively. Currency subs ...

due to Hyper Inflation. In June 2019 it also reduced the usage of Multi currency system and preferred to switch to US dollar In an interview with Former Finance Minister

Tendai Biti Tendai Laxton Biti (born 6 August 1966) is a Zimbabwean politician who served as Finance Minister of Zimbabwe from 2009 to 2013. He is the current Member of Parliament for Harare East Constituency and the second Vice President of Citizens Coa ...

pointed out that De-dollarization has failed dismally On 2022, Zimbabwe introduced new form of currency made by gold Mosi-oa-Tunya (Gold coin) to reduce inflation since Local currency has been considerably weakened The Governor of Reserve bank John P Mangudya said that "The Gold coins will contain one troy ounce of 22 carat gold", trade could be carried both locally and internationally

References

{{Reflist International trade Bilateral trading relationships