It doesn’t have to be just one alternative.

From what I have around Brazil is pushing a new(?) common currency for trading within Latin American countries, China is pushing Yuan for bilateral trading with several countries, and probably more blocks and trade partners follow similar policies elsewhere.

Not having all the eggs in the same basket may lead to some egg breaking, but not all of them at the same time. And the increasing perception of risk relying on dollars may make that strategy attractive.

Nobody is looking for _the_ alternative currency. The idea is to decentralize, which is, imho, a fair deal.

> The whole dedollarization narrative is like some weird propaganda pushed by china

China or not, it's not "weird". Each country pursues its own interests (obviously, including the US). And that is... normal?

It's almost like diversification is the solution.

Having all debts and credits in one currency is a recipe for disaster. Not only where the US wishes to make it so (Russia), but when times are hard and the US needs to move to protect its own economy (Sri Lanka).

> - yuan

The Odd Lots podcast just had an episode on this:

> There's a lot of discussion these days about de-dollarization and whether the US dollar will lose its standing as the world's sole reserve currency. Generally, people seem open to the idea, but they also don't see many good alternatives out there. The renminbi is the obvious candidate to take share away from the dollar, given the size of the Chinese economy and China's role in global trade. But for various reasons, the currency isn't suited to be a global reserve currency. So what would it actually take to become one? And what would be the effects if it started to play a major role in global trade? On this episode of the podcast, we speak with Karthik Sankaran, a longtime FX veteran, about what China would have to do if it really has global aspirations for its currency, and why a more multipolar FX landscape might be good for world financial stability.

* https://www.youtube.com/watch?v=T_EZDfe4y1Q

* https://omny.fm/shows/odd-lots/what-needs-to-happen-for-the-...

Snippet/clip on prerequisite(s):

* https://www.youtube.com/watch?v=mIfMC41-Zfc

Transcript:

* https://www.bloomberg.com/news/articles/2023-05-22/transcrip...

* https://archive.is/8iNgy

The two camps I hear pushing the "de-dollarization" narrative are:

BRICS (Mostly the R and C in that) for the purposes of domestic propaganda.

Bankers and Crypto folks who use the HIGHLY unlikely specter of de-dollarization to drive up the price of things like precious metals and crypto as "safe alternatives.

Even a cursory glance at the state of the dollar shows that there is no reality to the notion of its fall, for all of the reasons you already stated and more.

We're largely headed for Bretton Woods 2.0. Nobody wants a single country to operate as controller of the world reserve/trade currency, because it gives that country a grossly unfair economic advantage over the entire world, which also loosely equates to a military advantage. Bretton Woods was designed such that the USD would be the defacto world currency with all other currencies directly set against it. To prevent the US from exploiting this position, the USD was to be directly convertible to gold at a fixed rate, which severely handcuffed the ability to do things like 'print' excessive money.

So, the ideal is we'd behave responsibility with an unimaginable amount of power at our fingertips. You'll never guess what happened next. Anyhow, after we found ourselves without enough gold to pay off our debts, we simply defaulted and withdrew from Bretton Woods, collapsing the entire system. A fun quote from Nixon's Secretary of the Treasury of the era is, "The dollar is our currency, but it's your problem." Here [1] are some interesting graphs of result economic changes after the dollar became completely free-floating.

So the "real" question is what form Bretton Woods 2.0 will take. One reasonable, if not likely, possibility is BRICS new currency, which is set to be introduced as early as August. The details have not been released, but it seems likely that it will be backed by gold in a similar fashion to the original Bretton Woods, but without any single country having uncontested control over it or the ability to 'default' the entire system. If nothing else, we sure live in interesting times...

[1] - https://wtfhappenedin1971.com/

GBP! There before the USA never mind the dollar! ;-)

Not a big fan of how the history of the euro played out but I think I need to provide some nuance to your claims: Policy of the ECB has been as predictable as any other CB, European Govs have become much more fiscally prudent in the wake of the euro crisis (maybe too prudent). Eurozone debt to GDP levels stands at 91% (vs. 129% in the US). The "entire continent militarizing" will not meaningfully impact debt ratios (goal is to increase avg. military budgets from ~1.3% to 2% of annual GDP). The bigger question mark in Europe is potentially unsustainable expenses for social security and (related to this) a relative decline in the working age population (as everywhere else).

- IMF special drawing rights (SDR), some basket of multiple currencies.

- Swiss Franc (CHF). "But it's such a small market" -> lol they can make more.

- Japanese Yen (JPY).

Also, please don't format with monospace, it breaks things on mobile or small screens.

> The whole dedollarization narrative is like some weird propaganda pushed by china.

The beauty of the US dollar is it's always worth a US dollar... It's strength is a measure of much foreigners trust the US economy and it's political and judicial system. What drives the demand for the dollar is the will of people to invest money in American securities and on the American capital market. I don't see it ending anytime soon.

Chinese investors invest on the Chinese market in Yuans. Rich Chinese investors invest on the US market with US dollars.

The 'unit of currency' is immaterial. It all depends on whether or not it is usable by ALL players. In a prison, they often use cigarettes rather than some monetary currencies. Maybe in the future, the 'unit of currency' could be 'barrels of oil', grams of gold, grams of platinum, etc.

The US has blocked too many people from using the Dollar that the Dollar is not as 'universal' as it once was. So people will look for another alternative, or even many alternatives.

The article is basically trash. If anything the content of the article is the opposite of the headline.

To me, on a 50+ year time frame, the rupee is more interesting than any of the 4 mentioned.

I was just thinking yesterday how if 1989 in China went differently that the dollar right now could be in trouble.

Lula's currency is pretty laughable. A currency that you share with Argentina? What could possibly go wrong?

The alternative is all of them, and more. Dedollarisation does not mean that another single currency will step into the dollar's shoes as the global reserve currency. You will more likely have multiple spheres of influence with each one having a de facto dominant currency, and you will also have more countries doing trade in multiple currencies in order to "hedge their bets" as it were.

Like, the EU has no interest in trying to force the euro on the world. But in the aftermath of Brexit and the Trump presidency, they have grown concerned about other powers having too much control over their trade.

The more interesting thing is that, because the dollar has no serious reserve status competitor, the maintainers of the currency can be less restrictive in its management, and people can whine about it, but since there is no alternative, they're stuck with it, except for niche use cases that don't matter on a global scale. That's where all the discussion is stemming from: the dollar isn't as good, but it's still the best. It's normal to lament things that used to be better.

Obviously forgetting about Bitcoin /s

I don't think de-dollarization is particularly pushed by places like China. From the Chinese perspective, dollarization is a good thing because it means they can engage in intl trade without needing to open up their domestic currency and deal with the potential political instability that might result.

I think it's more oft pushed by 'sound money' cranks (either gold bugs or their fellow travelers) or by particularly ornery fiscal conservatives with an axe to grind about whatever monetary policy the US is pursuing this week.

Yeah, the costs of changing are greater than the costs of staying the same. But the basic idea of using a nation's currency as global reserve currency is a bad design.

"Triffin Dilemma" - a national currency used in a global context will always result in spiralling imbalances. Some China guy cited this as a proximal cause of the collapse in 2007-2008 and I don't think anyone would argue with that at all[1]. So there's a pressure to move to an OCA/OCR (optimum currency area or optimal currency region) that's more like "The World", even if that's a hypothetical space.

I mean, look at the United States today, aside from extractive industries. It's pretty much a military humping/fighting a financial industry on these teeny tiny little fast food legs. That's exactly what you would theoretically expect from an economy that's been the global currency for a couple generations, but it's a damn weird shape to bend your nation into.

The solution is not crypto, but definitely an analytically-arrived at unit that's redeemable in a bucket of commodities via a real World Bank structure. Maybe crypto could be a part of that, maybe a "carbon coin" or some other quantitative measure of future value. All this waffle spells the lie to the "international capitalism" story we've been telling ourselves - without World Cops, World Courts, World Laws, there is no World Market. It's bandits in Brioni with nukes and red tape.

[1] Although, of course, yes yes yes, his motives are suspect, but his statement was not. He wants the Yuan but no one else should.