De-dollarization has become a reality, and the debate on the dominance the greenback is gaining steam. Elon, Ray Dalio Chamath, Palihapitiya & 7 other people have said this.

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A growing number of countries are planning to move away from the dominance of the dollar in global trade and investment flows.
China has pursued yuan as a cross-border currency, while France's President has called for a reduction in the dependence on the dollar.
Ten experts have spoken out about the de-dollarization movement.

De-dollarization is gaining momentum around the world. More and more nations, from Asia to Europe to Latin America are putting together plans to stop the dominance of greenbacks in global trade and investments.

China and Brazil signed a deal for trade to be settled in their respective currencies. Meanwhile, French President Emmanuel Macron urged Europe not to rely on the dollar.

Due to the acceleration of the antidollar campaign, the yuan has overtaken its US counterpart in terms of cross-border Chinese transactions. The yuan is also Russia's main currency, since Moscow has been largely excluded from global finance after its war in Ukraine.

Goldman Sachs believes that attempts to undermine the dollar's dominance will be contained and constrained in the coming years, but other influential figures are more pessimistic about the greenback.

Ten top voices on the anti-dollar campaign.

Elon Musk, billionaire business magnate

Tesla and SpaceX's CEO warned against weaponizing currency like the US did with its economic sanctions and suggested that the de-dollarization may be related to this.

In a Tuesday tweet, he replied to a video posted by Peter St Onge in which he highlighted that the "de-dollarization" is real and happening quickly.

Dollar share dropped from 73% in 2001 to 55% by 2020. "Went from 55% down to 47% after sanctions were launched against Russia. Now de-dollarizing is 10x faster than in the previous 20 years," Onge said.

Musk said: "If currency is weaponized enough, other countries will stop using them."

Ray Dalio is the founder of Bridgewater

"Dollars are debt. Bridgewater Associates' founder said recently that holding a dollar, a central banking unit, is a debt. "The holders of this would say that they are already too exposed to US dollar denominated debt." There's less desire to buy.

Western sanctions have frozen $300 billion of assets at the central bank in Russia, which prevents Moscow from transacting with assets based on dollars or euros. These sanctions "increased perceptions that these debt assets could be frozen the same way they have been for Russia", Dalio stated.

He added, "There's less of a desire to hold US-dollar denominated debt for these reasons. This means, yes, less US Dollars." "The supply-demand situation is getting worse, especially as we have to continue selling them overseas to fund the deficit."

Emmanuel Macron is the French president

In a Politico article published this month, France's Macron said that Europe should reduce its reliance on the "extraterritoriality" of the US Dollar.

President Obama made the bombshell comments as he stressed that Europe should not get entangled in the tensions between China, the US and Europe. He said that if tensions between China and the US escalate, Europe would not have the resources or time to maintain its strategic autonomy. We will be reduced to vassals.

Chamath Palihapitiya, venture capitalist

Palihapitiya says that while the use of the Chinese yuan is on the rise, it will not be enough to undermine the dominance of the dollar.

In a recent All-In Podcast, he stated that "this whole thing is a gigantic nothingburger."

Palihapitiya stated that until the yuan is depackaged in a freely-floating currency we won't know what the true market clearing price is. Since China joined the WTO in 2001, it has been able to manipulate its currency to achieve the status of trading partner.

Stanley Druckenmiller, Duquesne Capital founder

After missing last year's rally, billionaire Druckenmiller has recently revealed that he is shorting US dollars. He said in an interview with Financial Times that he was confident about taking a negative position on the greenback because of the possibility of US interest rate cuts, the rise in non-dollar trading agreements and the weaponization the dollar.

He told the outlet that he was comfortable with his shorting of the US dollar. "Currency tendencies tend to last for two or three year." "We have been on a [long] run higher."

Jeremy Allaire, Circle CEO

Allaire tweeted: "If we wish to make the dollar more secure and competitive, then we must do two things."

He added: "Release its power as a native internet data type that can be used and integrated freely" and "remove any underlying IOU bank lending risk associated with electronic money and separate payment tokens and lending tokens."

Goldman Sachs

In a note, the bank's analysts wrote that de-dollarization was "a lot of talk (again) but not much action."

Strategists stated that "[P]articularly, the Dollar's decline in share is likely to be due to market forces. Treasuries have fallen and Asian central banks have sold their Dollar holdings last year to counteract the stronger Dollar,"

"While this is a risk that the US could abuse its 'exorbitant priviledges', there are no signs of it in the data (for instance, Brazil's increasing share of CNY reserve has replaced the Dollar, but not by much), and we believe that the US is the only real competitor at the moment," they concluded.

Former White House economist Joseph Sullivan

According to Sullivan the dominance of the dollar could be seriously challenged by a currency emitted by Brazil, Russia India, China, and South Africa.

He said that the BRICS were also poised to reach a level in international trade of self-sufficiency that had eluded other currency unions around the world. Because a BRICS Currency Union would not include countries that share borders, it's members could produce a greater variety of goods.

He said that the dollar's dominance would not end overnight, but a [BRICS] currency would start the gradual erosion of it.

Stephen Jen is the former Morgan Stanley currency expert and CEO of Eurizon SLJ.

"The prevailing view of 'nothing-to-see-here' on the US dollar as a reserve currency seems too innocuous and complacent," Jen, who coined the "Dollar Smile" theory, wrote in a note, per Bloomberg.

Investors need to understand that while the Global South cannot avoid the dollar completely, many of them have already begun to refuse to use it.

Anwar Ibrahim, Malaysian prime minister

Anwar Ibrahim, Malaysia's Prime Minister, said in a statement earlier this month that the country should not continue to depend on the US dollar. He said that Malaysia and China were already in discussions to use the ringgit or renminbi as a trade currency.

Continue reading: The antidollar campaign spearheaded by Asia is spreading to Europe. France has become increasingly critical of the dollar's dominance. Here are six rising threats to the dollar's dominance in global trade.

Original article available on Business Insider

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By: ztayeb@businessinsider.com (Zahra Tayeb)
Title: De-dollarization is undeniable, and the debate about the greenback’s dominance is heating up. Here’s what Elon Musk, Ray Dalio, Chamath Palihapitiya and 7 others are saying.
Sourced From: markets.businessinsider.com/news/currencies/dedollarization-currencies-elon-musk-ray-dalio-chamath-palihapitiya-2023-5
Published Date: Mon, 01 May 2023 10:30:00 +0000