Long live the slowly dying and unlamented US dollar
SummaryUS sanctions set off a hunt for options and encouraged multipolarity but the USD will still reign
A quiet but significant milestone was passed last year. For the first time in decades, by one estimation, the US dollar’s share in international reserves fell below 50%. Stephen Jen, a well-known currency analyst, estimates that the USD fell from about 73% of international reserves in 2001 to less than half in 2022. Jen argues that the dollar’s stunning drop was seemingly quickened after the US decided to weaponize the dollar-based financial system against Russia. For emphasis, Jen says “what we witnessed in 2022 was sort of a ‘defund-the-global-police’ moment, whereby many reserve managers in central banks around the world disagreed with the conduct of both Russia and the US."