Can Latin America Achieve De-Dollarization? Let’s Take a Look at What Experts Say
In recent years, people started to talk about de-dollarization . Several nations have begun working displace the US dollar as the dominant reserve currency worldwide . And although the idea of de-dollarization has been spoken about before, recent developments have bolstered the likelihood that it will happen this time, albeit slowly at first .
In recent years, people started to talk about de-dollarization . Several nations have begun working displace the US dollar as the dominant reserve currency worldwide . And although the idea of de-dollarization has been spoken about before, recent developments have bolstered the likelihood that it will happen this time, albeit slowly at first .
Russo-Chinese Rapprochement Accelerates De-Dollarization
Everything picked up speed when China and Russia inked a trade deal that abandons the US dollar in favor of the Chinese yuan . At the same time, BRICS countries (Brazil, Russia, India, China and South Africa) announce plans to launch a new reserve currency as part of a new economic system .
These happenings joined others across Africa, the Middle East, Europe, and Asia. Since the Bretton Woods accords, the United States has dominated international finance via its currency and the SWIFT system . Due to “the use of the dollar as a political and economic tool to impose itself on other countries” as the French journalist Renaud Girard recently revealed, this area has started to run out since the Russo-Ukrainian war .
A New Era of “Yuanization”?
The first steps of this “yuanization” came from BRICS and other African and Asian nations . Brazil, Argentina and Chile inked the first swap deals with the Asian juggernaut after the 2008 financial crisis . Brazil and Argentina agreed to restart currency exchange using yuan and local currencies when they updated their agreements in 2013–2014 and again in 2023 . They are doing this to reduce the rate at which dollars are leaving the country .
Russian researcher Mikhail Beliáyev thinks that the settlement in yuan and national currencies will deepen the economic ties of China, Brazil and Argentina . Uruguay may join the coalition, according to the economist who also claims that “the toxicity of the dollar pushes Latin American countries to abandon it .”
However according to Jannet Quiroz, the deputy director of Monex, things are different. She acknowledges the yuan’s growth in several Latin American countries but warns that those close to the United States may be less likely to adopt the currency .
It Might be a Slow and Hard Process
Juan Paz y Mio, an Ecuadorian historian, also shared his thoughts. The expert believes that de–dollarization on a global scale is inevitable and that the current crisis will force Latin American countries to consider “the uncertain future of the currency .” But it won’t be quick or simple, as the Mission Truth Research and Analysis Group notes as Latin America is one of the most dollarized regions in the world .
Some countries use the dollar as their sole currency, while others use it as one component of a mixed dollar-local currency economy .
As a result, it will be necessary to examine the finer points . A detailed assessment is required in increasingly “dollarized” nations .
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