By Winni Zhou and Rae Wee
GT Voice: De-dollarization inevitable as dollar steps down from altar
By Global Times Published: Apr 26, 2023 10:20 PM
What’s perhaps more surprising – and potentially worrying for Washington – is how expensive and scarce offshore US dollars are becoming. As the US Federal Reserve’s aggressive interest rate hikes hit global financial systems, an increasing amount of foreign capital flowed back to the US, leading to a global US dollar shortage. The US’ interest rate hikes and the resulting shortage of US dollars serve as another important factor driving more countries to push for a quicker pace of de-dollarization.
In March, the US Fed said it had joined with other countries’ central banks in a coordinated action to enhance the provision of liquidity through the standing US dollar swap line arrangements, Reuters reported. Releasing more liquidity may help mitigate the issue of US dollar shortage. The move, to some extent, reflects the anxieties of US political and economic elites to the current trend of de-dollarization. However, it should be pointed out that releasing liquidity won’t solve the fundamental problem and will have a limited impact on slowing down the de-dollarization pace, as long as the US continues to weaponize US dollar hegemony and adheres to its irresponsible monetary policy.
China-Russia relations are built on the basis of non-alliance, non-confrontation and non-targeting of third countries. It is not China or any other country, but the US itself that sets off the inevitable trend of de-dollarization, thanks to its hegemonic behaviors such as unilateral sanctions. What people fight against is not US dollar, but US dollar hegemony.
Facts have proven that the hegemony of US dollar can be broken. Amid global economic uncertainties, emerging economies should strengthen financial and currency cooperation, jointly tackling global challenges and maintaining financial stability.