The United States is currently facing challenging economic times, and our currency, once the pillar of the global economy, is now at a critical juncture in history. Global changes are happening, and other nations are also undergoing significant economic shifts. It’s evident that the world is heading into uncharted territory, with geopolitical tensions influencing countries to make strategic moves. Eleven countries have declared their intention to cease using the U.S. dollar by 2025. Here’s what we know about this global development and whether it signals the end of the dollar's dominance.
What’s Happening with the Dollar?
The U.S. dollar, historically the world's dominant currency, has been the leading global economic force since World War II. It became the primary international reserve currency, with countries using it to stabilize their economies. Additionally, 80% of global trade is conducted in dollars, including transactions involving oil and other essential resources.
Now, however, eleven countries have chosen to stop using the dollar within their borders, opting instead to strengthen their local currencies and reduce reliance on the U.S. dollar.
Is This the End of the Dollar?
While this is not an immediate farewell to the dollar, it is a significant step toward de-dollarization. The U.S. dollar's dominance won't disappear overnight—such a change would take considerable time. Experts like Joyce Chang, Chair of Global Research at JP Morgan, suggest that it could take decades to fully transition, though early signs of a decline are already emerging.
What’s the Purpose of This Shift?
The eleven countries involved, all part of the Commonwealth of Independent States (CIS), aim to prioritize their own currencies. This move, however, will have a broader impact on international trade. De-dollarization isn’t just about shifting currency; it also marks a change in global economic power. By reducing reliance on the dollar, these countries gain more autonomy in establishing trade relations, forging new alliances, and minimizing U.S. influence on their economies.
Which Countries Will Stop Using the Dollar?
As expected, it’s the former Soviet republics, or those that were once part of the USSR, that are leading the charge. These countries are set to eliminate the dollar from their international transactions:
- Armenia
- Azerbaijan
- Belarus
- Kazakhstan
- Kyrgyzstan
- Moldova
- Russia
- Tajikistan
- Turkmenistan
- Uzbekistan
- Ukraine
With this move, these countries aim to strengthen their economic bloc by conducting transactions in their own currencies.
Why Is This Happening Now?
These nations have decided to follow Russia's example in reducing their dependence on the dollar, despite ongoing tensions between Russia and Ukraine. The rise of stable and secure alternatives, such as digital currencies, has made this transition more feasible.
How Will Citizens Be Affected?
The switch from the dollar in these countries is scheduled for 2025, though the process will be gradual. This approach will give businesses and financial institutions time to adjust their systems, allowing citizens to adapt to the transition to a local currency-based economy.
When Will the Dollar Ban Take Effect?
Although no official date has been set, the change is expected to begin in mid-2025, following Russia’s model for de-dollarization.
While the U.S. dollar remains dominant, this decision marks a significant symbolic blow to its global hegemony. Will this be the first in a series of moves against the dollar? Only time will tell, but it’s clear that the global economic landscape is shifting.
