Finance
Goodbye to the dollar: all operations and the use of banknotes will be prohibited in these 11 countries
The effort to de-dollarize international monetary transactions has been growing around the world and another economic block plans to follow suit.
The US dollar is the preeminent reserve currency in the world representing 57% of global foreign exchange reserves. When it comes to exports, the US dollar is currently used in 54% of invoices and a whopping 88% of foreign exchange transactions according to the Atlantic Council’s Dollar Dominance Monitor.
However, there has been talk of the green back’s dominant position weakening in recent years as trading blocks form to challenge the US’s dominance. Efforts are growing among several nations to de-dollarize their economies and perform cross border transactions in domestic currencies.
The latest group to strive to expunge US currency from being used for transactions within their respective borders and between each other is the Commonwealth of Independent States (CIS), which consists of Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine. The eleven members of regional intergovernmental organization are working to reduce the influence of the US dollar while strengthening their own at the same time.
It’s been reported that they have decided to abandon the use of US currency in cross border commercial transactions and to ban the circulation of banknotes within their borders. To that effect, in 2024, 85% of transactions between CIS member states were conducted in national currencies.
Is this the end of the US dollar?
The US dollar is not going anywhere in the short-term, but “diversification away from the dollar is a growing trend,” said Joyce Chang, chair of Global Research at J.P. Morgan. She sees from her institution’s analysis that “the factors that support dollar dominance remain well-entrenched and structural in nature.”
“The dollar’s role in global finance and its economic and financial stability implications are supported by deep and liquid capital markets, rule of law and predictable legal systems, commitment to a free-floating regime, and smooth functioning of the financial system for USD liquidity and institutional transparency,” Chang added. “All in all, meaningful erosion of dollar dominance is likely to take decades.”
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