Dedollarisation: Myth And Reality
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- Опубликовано: 10 май 2023
- Last week Uday Kotak, the founder and outgoing CEO of Kotak Mahindra Bank, set the cat among the pigeons by alleging that the United States dollar, the world’s reserve currency, is a “financial terrorist”. He is not alone. Last month President Luiz Lula of Brazil, during a bilateral visit to China, too questioned the hegemony of the greenback.
Undoubtedly, there is a growing chorus against the global domination of the US dollar. Especially, given the penchant of the Americans to weaponise its currency during geopolitical conflicts.
Last year the United States and its allies imposed sanctions against Russia, following its invasion of Ukraine - this included shutting down the international payment gateways and freezing half of Russia’s $640 billion in foreign currency reserves.
But is it conceivable for the world to undergo a dollar detox? And, indeed if this was to happen, will it trigger fresh disruptions - given that nearly 90 percent of global trade and financial transactions are denominated in the US dollar?
To understand this and more we spoke to Montek Singh Ahluwalia, the former Deputy Chairman of the Planning Commission.
#dedollarization #dollar #financialterrorist #india #china #europe #udaykotak #kotak
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Glad to see a very educational video freed from polarizing politics in social media.
Thanks for very purposeful, in practical terms discussion on reserve currencies. Much benefited.
De-dollarization should not be equated as replacement of dollar by the currency of another country as the premier reserve currency. What is imp is to start trade in the mutual currencies of the two countries.
If country A exports goods to B, worth 100Bn & imports from it worth $25Bn, then at least $25Bn goods can be transected in mutual currency. Trading in local currencies also helps in getting rid of transaction cost of settling trade in dollars.
Russia is having surplus INR as Indian companies are reluctant to export because of fear of secondary sanctions on them. Otherwise trade in mutual currencies also provides incentive to increase mutual trade.
If large no. of countries decide to trade in mutual currency, then there will significant drop in dollar demand leaving surplus dollars with the US risking hyperinflation there & jeopardizing US economy. The US would oppose it making all efforts to fail this process. The non-Western world, after seeing Western behavior on Russia, will develop a trading system that does not make them vulnerable to dollar weaponization or hegemony. That would be the aim rather than making a new dominant reserve currency.
Agree with u
How will the value of currency between two trading nations be determined. On what basis. Pegged to Dollar ?. 2. Have you ever thought of what could happen to Indian so called IT coolie services and ensuing joblessness. India doesn't export any jobs to any countries, where as US exports jobs to India. For your chest thumping, Indian economy still is a money order economy dependent of remittances sent from Indians working abroad. By one recent account, the remittances last year alone was $100.00bn. Think what will happen to joblessness and who will provide jobs. So hold off on your chest thumping.
@@Madison-nw9rc The value of the goods in dollars in the world market as well as value of mutual currencies as per their values in dollar on the day of the trade transection form the acceptable parameters. That was the basis of Rupee Rial trade with Iran until Trump sanctions & that was also the basis during India's trade with the USSR. That can also form the basis of trade with the countries in the non-Western world willing to share benefits of trade in local currencies. With the West, the trade will continue in Dollars & Euro. Aim is to reduce exclusive dependence on dollar & Euro and to reduce excessive dollar & Euro hoarding. The aim is to develop a trading system that does not make the country vulnerable to dollar weaponization or hegemony by reducing total dependence on dollar mediated trade.
@@Madison-nw9rc US dollar = Nazi Hitler.
@@Madison-nw9rc Exactly..bcoz in US,,,,closing down/falling Business, Silicon Valley layoffs...esp. in Service sectors...Salary reductions....so, Over say 10 years from now....with India rising opportunities.....is expected an "Equalization" of Incomes...where an Indian need NOT work / go abroad...Hence no need, to REMIT home any Money. This process will GRADUALLY happen...Please Wait & watch
I have personally lost money in rubbish like currency conversion chargers and additional charges by bank for settlement of the dollar or other to my account. Some time you can lost as much as 3-4% so it's a big thing. I am glad atleast there is some movement or discussion in right direction.
What do your losses have to do with reserve currency ? You are paying for services you requested , banks are not charity organisations .
Nice discussion regarding a hot topic that is very much in the news. Apart from current affairs, maybe Capital Calculus & StratNews Global can also create informational and educational content regarding geoeconomics. Geoeconomics 101, if you may. For example, what is a reserve currency and capital account, etc.
I believe everyone should trade in their own currencies by maintaining the trade balance with one another and convert excess of trade balance in gold reserves.
Not possible. There needs to be an understanding of why dollar became this powerful in first place.
@@parasG001 Exactly.
A double-addable sword, you cannot reveal too much, because you and in the same predictable, the question the power of money?
Montek is old and isn't necessarily upto speed on all capabilities that can change the current system. It's not just a weaponisation risk, what gives the US the freedom to print and distrbute a global currency to only its citizens at times of crisis and hold the world hostage to the inflationary problems?
Nations should stop buying US bonds, it is literally exporting inflation to the rest of the world.
1. Rupee will not become a reserve currency just because we wish or say so! As Montek rightly said, with 2% share of global trade, India is no where near such a status. But India can use rupee in bilateral settlement to minimize use of USD in cases where prices can be referenced via USD! This will help countries which have USD shortage. If there are excessive rupee reserves, we should allow them to be swapped into UAE dirhams or even USD. So there are ways to promote our trade with Global South using this route. But let us not call this de dollarization!! 2. Good show by Anil. BTW, why he cant he sit comfortably in his office and ask questions?!!! he!! he!!
The view of "reserve currency" Montek has is based wholly on the current role that the dollar is playing. And that is the problem - a very limited view.
Reserve currencies are not an all or nothing game. Even partly breaking out of the petrodollar system using Rupee would by default make Rupee a reserve currency. The eurodollar system though is unavoidable for India for forseeable future.
@@kth6736 India does not have attributes that are needed to make Rupee reserve currency . Any currency can become reserve currency . Capital controls prevent reserve currency status and there must be large liquid asset market like bond and treasury where reserve assets can be held . Reserve status is earned , small countries like Canada and Australia have reserve currency status but only one country can have dominant status due to network effect .
@@vijayvarade8077 capital controls do not batter. The british pound used to be reserve currency with heavy capital controls. Only thing that matters is if you can convince some country like Russia or Saudi Arabia to hold your bonds in their reserves. It is not that difficult to keep capital controls domestically while giving partial convertiblity to foreigners holding your bonds. China is doing exactly this.
Problem with India ia that the currency depreciates regularly. Once that can be controlled then many countries will be interested.
Countries are free to conduct any transactions and trade in their own currencies, there is no law or policy preventing them from do that. It is their choice. Countries trying to industrialize can not be the worlds reserve currency, it will make their currency too strong, they willbe priced out of the market.
But the question is are countries ready to accept your currency...what value it brings to their country...
Do these people mean credit or cash?
Thank you come again😂
Montek displays a typical lack of imagination.
The view of "reserve currency" Montek has is based wholly on the current role that the dollar is playing.
Reserve currencies are not an all or nothing game. Replacing the use of petrodollar even with few cointries who are willing to hold Rupee amd willing to buy GSec's with that will make Rupee a reserve currency. It does not have to mean replacing the whole shabang of eurodollar and petrodollar systems.
It has already failed , Russia and India have already suspended trade settlement in Rupee .
The objective is not to REPLACE the dollar!
And then there is India is a colony nation, unreliable, slavish, inferior complex. Gtfoh!!!
Haters
Respect international borders, don't sponsor terrorism, don't commit genocide, and no country will targeted by the U.S with sanctions or a weaponized dollar.
Problem is america routinely lies about other cojntries doing these things.
Not to mention that america itself has no respect for international borders, has sponsored terrorism in tens of countries including in India and america has comitted and sponsored many a genocide like in Cambodia, Vietnam and Bangladesh.
Sorry .. but U.S can’t dictate what’s right and wrong..
by the way, U.S is the country
- started war in 70+ countries post WW2 after establishing UN .. please see the Wikipedia on this
- funded terrorism ( Taliban was created by U.S money by Pakistan ) and that terrorism killed thousands in India too apart from eviction of Soviets from Afghanistan
- U.S still stands the only country to have tested the nukes
- dropped more bombs in Vietnam than entire WW2 combined
Even this Ukraine war is for the benefits of U.S arms companies at the cost of Ukraine lives..
U.S has the right to defend its national security 10k miles away from their land but Russia does not have the right to save its borders being a nuclear superpower.. 😊
And after this, the western propaganda is endless to prove U.S is a force for good..
😂😂
US had sanctioned India, when it conducted it's nuclear weapons test. No right for a democratic country with largest population to have a defensive nuclear weapons program? Compare invasions by the west vs India.
DREAM ON! A little brainwashed are we? The US has the monopoly on all those things that you have listed, then why does not the US target itself with sanctions or weaponizing the dollar against itself? I strongly suggest you purchase a World History book, not one edited by the US, though.
india needs a Planning Commission. get rid of modi nonsense.
Under Dr Manmohan, Planning Commission was a BIGGER nonsense
😭😂😂
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