Dr. Bawa Singh, Sonal Meena and Jay Koche M
The U.S. Dollar (USD) has long been holding the strong position in the financial world as the primary reserve currency. The strong status of the USD has shaped the global financial world since the end of World War II. The dominance of the USD was solidified by the Bretton Woods Agreement in 1944, which pegged the dollar to gold. Notwithstanding, the US abandoned the gold standard in 1971 and in the post of the same, the USD continued to dominate the global financial world due to the strength of the US economy, political stability, and the establishment of the petrodollar system. Under the petrodollar agreement which mandated the oil exporting countries to carry out the oil transactions in USD. This arrangement further bolstered the US to exert a strong dominance and influence over the global economic systems and implement effective international sanctions.
However, given the recent geopolitical and geo-economic developments, particularly the rise of the BRICS (comprising of Brazil, Russia, India, China, and South Africa) has raised questions about the future of the dollar. The agenda of de-dollarization has become a central agenda for the BRICS countries, as they seek to reduce their dependence on the USD for their international trade and financial transactions. It is argued by many policy makers and practitioners that this shift is driven by several geopolitical and geo-economic factors, including the frequent use of the dollar as a tool for imposing financial sanctions. The frequent imposing of the financial sanctions further pushed many countries such as Russia, Iran, and Venezuela towards the de-dollarization. These countries perceiving that such actions on part of the US, threatening to their sovereignty and are motivated to seek alternatives to the dollar.
No comments:
Post a Comment