WHY COUNTRIES CAN'T DE-DOLLARIZE

Описание: EVEN IF countries actually WANTED to de-dollarize, they couldn’t, because everything that’s made it the lynchpin of the global financial system remains in place and is as strong as ever.
You could point to things like the U.S. having the world’s largest economy and most powerful military, and those things matter, but they’re actually NOT the main reasons that it would be so hard to bring down the dollar.
I’d point to three others.
First, the West controls the global financial system and it’s NOT that easy to build a new one. China and Russia have been trying for YEARS with minimal progress.
Money primarily moves around the world using two systems, SWIFT and CHIPS.
SWIFT is basically the language that almost all of the banks around the world use to communicate with each other when processing transactions. It’s based in Brussels, and largely controlled by the U.S. and the E.U.
CHIPS is a U.S.-based system that clears about $1.8T dollars of transactions daily, and in order to use it you HAVE TO go through a U.S. bank or bank branch.
Nearly every single dollar-based transaction in the world RELIES ON either SWIFT or CHIPS, or both.
Russia came up with a SWIFT-alternative in 2014 but it’s BARELY used for international trade, and China came up with a CHIPS alternative in 2015, but 80% of its transactions still rely on SWIFT.
The second reason it would be so hard to displace the dollar is that the IS NO viable alternative.
A reserve currency needs to be held in large quantities by governments around the world.
It’s basically like their savings, so to understand what qualities are important, think about the qualities YOU’D want in a currency that stores YOUR savings.
#usd #fundamentalsoffinance #dedollarization