The declining use of the United States Dollar (USD), hence Washington’s position on the world exchequer, is an evergreen issue for journalists who know that, sooner or later, they will be proven right. 2022 gave them food for thought with several diplomatic declarations in that respect, including from old allies like Saudi Arabia[1]. However, the key point might be somewhere else, between US economic sanctions policy and the rise of crypto assets, including the Central Banks Digital Currencies (CBDC) which, along with others, constitute converging low-signals of a slow-moving but irreversible movement from a USD dominant position to a multipolar system.
De-dollarization is the process according to which institutional, business, or individual actors reduce or stop the use of the US Dollar currency whether it is as a unit of account, storage of value, or as a trading/investment medium. De-dollarization includes, but is not limited to, selling the USD as a foreign exchange reserve, excluding it from trade agreements or the transactions of commodities as well as, among other uses, denominating assets in local currencies or gold. International or regional bodies as well as governments conceive sanctions as an instrument, between diplomacy and war, to alter the behavior of States or non-States actors by affecting their interests, mostly economic and financial. In practice, the impact of sanctions largely consists of US secondary sanctions blocking investment, trade, and exchange with listed entities to anyone, even non-US, using or linked to USD. Their number peaked during the last 10 years. In this regard, crypto-assets have been considered an alternative to the USD and the international banking system used by Washington to track forbidden transactions. These assets, even if not formally currencies, can be used to transfer value hence to trade with entities under sanctions. However, their regulation has quickly evolved everywhere. The rise of CBDC out of the influence of the USA could freshen up their interest.
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[1] Reuters, China to use Shanghai exchange for yuan energy deals with Gulf nations, 9 September 2022
