For decades, the US dollar has been the undisputed king of global currencies. However, dramatic changes are happening, and Brazil, Russia, India, China, and South Africa are making big moves to enable them to become less dependent on the US dollar in the years ahead.
This is really bad news for the US because having the primary reserve currency of the world has enabled Americans to enjoy a massively inflated standard of living. Once the US loses that status, lifestyles will be much different than they are today. Unfortunately, most Americans don’t understand any of this.
In recent years, US leaders have treated the stability of the US currency with contempt. However, most Americans just assume that the dollar will always reign supreme. Meanwhile, much of the planet is preparing for a future in which the US dollar will be far less important than it is right now.
In this blog post, we will discuss the seven signs that global de-dollarization has just shifted into overdrive and the effect that has on people trying to get debt consolidation assistance.
De-Dollarization Will Impact Your Access to Credit and Debt Consolidation
Higher Interest Rates on Loans
As the US dollar loses its status as the world’s primary reserve currency, inflation is likely to rise, which may prompt central banks to raise interest rates to combat it. This could lead to higher interest rates on loans, including debt consolidation loans. As a result, consumers may find it more difficult to pay off their debts.
As de-dollarization gains momentum, it’s important to understand how it could impact your ability to access credit and consolidate debt. When considering a consolidation loan or a balance transfer credit card, it’s important to pay attention to factors such as origination fees, monthly payments, and loan proceeds.
If you have bad credit or fair credit, you may have a harder time finding lenders who are willing to approve you for a loan or a credit card with favorable terms. Additionally, lenders may review your credit report to determine your creditworthiness and assess the risk of lending to you. Understanding the impact of de-dollarization on your access to credit and debt consolidation can help you make informed decisions about managing your debt and financial future.
A decline in the Availability of Credit
As other currencies, such as the Chinese yuan, become more prominent, the availability of credit denominated in US dollars may decline. This could make it more difficult for consumers to access debt products such as debt consolidation loans. Consumers may need to explore alternative options for consolidating their debts or work to improve their credit scores in order to qualify for loans.
De-dollarization has been a growing trend for several years now, and as the global economy shifts away from the US dollar, it’s likely to have an impact on your access to credit and debt consolidation. When it comes to debt consolidation loans, your credit score is a key factor that lenders will consider when deciding whether to approve you for a personal loan. The best debt consolidation loans typically have lower origination fees, annual percentage rates APR, and monthly payments than other types of loans.
However, your credit history and minimum credit score can also affect your eligibility for these personal loans. If you have high credit card debt or multiple debts, consolidating your debt with a loan can help you save money and simplify your debt repayment process. Home equity loans and balance transfer credit cards are also options to consider when looking at your bank account, although these may come with balance transfer fees or higher interest rates.
Keep in mind that applying for a debt consolidation loan may result in a soft credit inquiry or a hard credit inquiry, which can temporarily lower your credit score. Ultimately, it’s important to carefully review the terms of any consolidation loan, including loan origination fees, interest rates, loan amounts, and monthly payments, to ensure that it’s the right choice for your existing debt and financial situation.
A Decline in Value of Investments
As the value of the US dollar declines, the value of US assets denominated in US dollars may also decline. This could include retirement accounts, stocks, and other investments held by consumers. To mitigate this risk, consumers may need to diversify their investments and consider alternative investment options.
Planning for the Future
Given the potential impacts of global de-dollarization on consumer personal finances, it is important for consumers to plan for the future. This may involve reducing debt, building up savings, and diversifying investments to reduce exposure to US dollar-denominated assets. Consumers may also want to explore alternative debt consolidation options, such as peer-to-peer lending or credit counseling services.
Ultimately, the trend towards global de-dollarization is likely to have significant implications for consumer personal finances and access to debt products such as debt consolidation loans. By staying informed and planning for the future, consumers can work to mitigate these potential risks and protect their financial well-being.
7 Signs That De-Dollarization is Here to Stay
Sign 1: BRICS nations developing a new currency
The BRICS nations (Brazil, Russia, India, China, and South Africa) account for over 40 percent of the total global population and close to one-fourth of the global GDP. The fact that they are working to develop a new currency should greatly concern all of us.
The deputy chairman of Russia’s state-owned VTB Bank, Alexander Babakov, said on March 30th that the BRICS block of emerging economies is working on developing a new currency that will be presented at the organization’s upcoming summit in Durban. “The transition to settlements in national currencies is the first step.
The next one is to provide the circulation of digital or any other form of a fundamentally new currency in the nearest future. I think that at the BRICS leaders’ summit, the readiness to realize this project will be announced. Such works are underway,” Babakov said on the sidelines of the Russian-Indian strategic partnership for development and growth business forum.
Babakov also stated that a single currency could likely emerge within BRICS, and this would be pegged not just to the value of gold but also to other groups of products, rare earth elements, or soil.
Several nations in West Asia and North Africa have expressed interest in joining the block, including Saudi Arabia and Algeria. Last year, Iran officially applied to join BRICS. Earlier this month, South African Foreign Minister Naledi Pandor revealed that global interest in BRICS is huge, adding that she had 12 letters from interested countries on her desk, including the UAE, Egypt, Argentina, Mexico, and Nigeria.
The news of a possible BRICS currency comes as a growing number of nations across the world are moving away from conducting trade in US dollars as a result of Washington’s policy of economic coercion. The US dollar plays a far too dominant role in global finance. Whenever the Federal Reserve Board is embarked on periods of monetary tightening or loosening, the consequences on the value of the dollar and the knock-on effects have been dramatic.
Sign 2: China and Brazil trading in their own currencies
China and Brazil, two of the BRICS nations, have just reached a deal to trade in their own currencies. The Chinese renminbi is speeding up in expanding its global use, a trend that will help build a more resilient international monetary system, one that is less dependent on the US dollar and more conducive to trade growth, experts said on Thursday. They commented after China and Brazil, two major emerging economies and BRICS members, reportedly reached a deal to trade in their own currencies, ditching the US dollar as an intermediary.
The deal will enable China and Brazil to conduct their massive trade and financial transactions directly exchanging the RMB for Ria’s and vice versa, instead of going through the dollar. The financial sanctions adopted by the United States since the start of the Ukraine crisis have triggered a crisis of confidence for the dollar to some extent, boosting the global use of other currencies, including the renminbi.
On the sidelines of the Boao Forum for Asia annual conference, officials discussed the need to reduce dependence on the US dollar, euro, yen, and British pound from financial transactions, and instead, move to settlements in local currencies.
The meeting discussed efforts to reduce dependence on major currencies through the local currency transaction scheme (LCT). This is an extension of the previous local currency settlement (LCS) scheme that has already begun to be implemented between Asian members. This means that an
Asian cross-border digital payment system would be expanded further, allowing Asian states to use local currencies for trade. An agreement on such cooperation must be reached between Indonesia, Malaysia, Singapore, the Philippines, and Thailand, which was done in November 2022. This move by China and Brazil to trade in their own currencies is another sign that the de-dollarization trend is gaining momentum.
Sign 3: Asian nations discussing ways to reduce dependence on major currencies
During a meeting last week in Indonesia, finance ministers from Asian nations discussed ways to reduce dependence on the US dollar, euro, yen, and British pound. An official meeting of all Asian finance ministers and central bank governors kicked off on Tuesday, March 28, in Indonesia.
At the top of the agenda were discussions to reduce dependence on major currencies through the local currency transaction scheme (LCT). This is an extension of the previous local currency settlement (LCS) scheme that has already begun to be implemented between Asian members.
This means that an Asian cross-border digital payment system would be expanded further, allowing Asian states to use local currencies for trade. An agreement on such cooperation must be reached between Indonesia, Malaysia, Singapore, the Philippines, and Thailand, which was done in November 2022. This move is another sign that the de-dollarization trend is gaining momentum.
Sign 4: Saudi Arabia becoming a dialogue partner in the Shanghai Cooperation Organization
In a move that has enormous implications for the petrodollar, Saudi Arabia has agreed to become a dialogue partner in the Shanghai Cooperation Organization (SCO). The state-owned Saudi Press Agency said that in a session presided over by King Salman bin Abdullah, the Saudi cabinet on Tuesday approved a memorandum awarding Riyadh the status of a dialogue partner.
The Shanghai Cooperation Organization is a political, security, and trade alliance that lists China, Russia, India, Pakistan, and four other Central Asian nations as full members. The organization further tallied four observer states, including Iran, and nine dialogue partners, counting in Saudi Arabia, Qatar, and Turkey.
It is headquartered in Beijing and served by China’s Zhang Ming as Secretary-General. Saudi Arabia’s decision to join the SCO, while falling short of full membership, takes Riyadh’s interests further east at a time when Beijing is testing out its sway in the Middle East. In a potential hint of US influence, China brokered a deal for longtime Mideast rivals Saudi Arabia and Iran to resume diplomatic relations and reopen embassies in each other’s countries.
Sign 5: China completed its first trade of liquefied natural gas settled in Chinese currency
The Chinese just completed their very first trade of liquefied natural gas that was settled in Chinese currency instead of US dollars. Chinese state oil and gas giant CNOOC and Total Energies completed the first LNG trade on the exchange with settlement in the Chinese currency, the exchange said in a statement carried by Reuters. The trade involved around 65,000 tons of LNG imported from the United Arab Emirates. The Shanghai Petroleum and Natural Gas
Exchange added that China has been looking for years to establish world trade deals in one to increase the relevance of its currency on the global markets and challenge the US dollar’s dominance in international trade, including in energy trade.
Over the past year, Russia has turned to trade in yuan in the wake of Western sanctions on its exports, imports, and energy trade, as the Chinese currency has become Putin’s only alternative to reduce exposure to the US dollar and the euro. This move is another sign that the de-dollarization trend is gaining momentum.
Sign 6: India offering its currency as an alternative for trade
India will offer its currency as an alternative for trade to countries that are facing a shortage of dollars in the wake of the sharp tightening in monetary policy by the US Federal Reserve in decades. Facilitating the rupee trade for countries facing currency risk will help disaster-proof them,
Commerce Secretary Sonil Bathwell said during an announcement on India’s foreign trade policy on Friday in New Delhi. This move is aimed at reducing the demand for the US dollar and insulating India’s economy from global shocks. Officials have previously said that, apart from Russia, countries in Africa and the Gulf region were also keen to trade in its local currency. This move is another sign that the de-dollarization trend is gaining momentum.
Sign 7: Saudi Arabia accepting Kenyan shillings as payment for oil shipments to Kenya instead of US dollars
Saudi Arabia has agreed to accept Kenyan shillings as payment for oil shipments to Kenya instead of US dollars. As the US currency exchange rate hit 145.5 shillings due to increased demand by importers, President Uhuru accused oil cartels of stockpiling American dollars in response to the crisis, sparking fuel shortages throughout Kenya.
Sri Lanka, Bangladesh, and Egypt are facing dollar shortages and have shown interest in trading in the Indian currency. This move is another sign that the de-dollarization trend is gaining momentum.
In conclusion, the de-dollarization trend is gaining momentum, and the signs are clear. The US dollar has been the undisputed king of global currencies for decades, but that may be changing. The BRICS nations account for over 40% of the total global population and close to one-fourth of the global GDP. They are working to develop a new currency that will be presented at the organization’s upcoming summit in Durban.
China and Brazil have just reached a deal to trade in their own currencies, and finance ministers from Asian nations discussed ways to reduce dependence on major currencies. Saudi Arabia has agreed to become a dialogue partner in the Shanghai Cooperation Organization, and India will offer its currency as an alternative for trade.
Saudi Arabia has even agreed to accept Kenyan shillings as payment for oil shipments to Kenya instead of US dollars. These moves are all signs that the de-dollarization trend is gaining momentum, and it’s only a matter of time before the US dollar loses its status as the world’s primary reserve currency.
This trend has significant implications for the US economy and the rest of the world. The US dollar is the source of the country’s economic power, and losing its status as the world’s primary reserve currency could have far-reaching consequences. It could lead to a decline in the country’s standard of living, as the inflated standard of living that Americans enjoy today is partly due to the dollar’s status as the world’s primary reserve currency.
The de-dollarization trend could also lead to a rise in global economic instability, as the dollar has played a dominant role in global finance. The consequences of this trend are difficult to predict, but one thing is clear: change is happening at a pace that is absolutely breathtaking. It’s time for Americans and the rest of the world to start paying attention to this trend and its potential implications.