A top economist warns the US dollar will ‘no longer be the dominant world currency’ as trade in Chinese yuan rises

A top economist chimed in on the ongoing debate on de-dollarization, warning that the allure of the US dollar is waning.

The greenback “doesn’t have quite the pull it used to,” Paul Gruenwald, the global chief economist at ratings agency S&P Global, said at a conference in London on Tuesday, Reuters reported.

The US dollar “will continue to be a leading world currency,” Greunwald said, per Reuters. However, “it will no longer be the dominant world currency,” he added.

Gruenwald’s assessment came as countries around the world are flocking to backup currencies for trade following sweeping sanctions against Russia that expelled the country from the US dollar-dominated global financial system.

The Western-led sanctions spooked other countries so much that they are now lining up backup currencies for trade and even repatriating gold reserves for safekeeping.

“We’ve got other things happening outside of the dollar world,” said Greunwald, citing a growing volume of trade that’s being done in the Chinese yuan as an example, per Reuters.

But the greenback’s hold on the world’s financial system is so strong that it accounted for almost 90% of global foreign currency transactions, according to a 2022 survey by the Bank of International Settlements, an organization whose members are central banks.

Source: Business Insider