Effects: Over-reliance on the US dollar

[justdimin]

Choose any other country but not China for sure. I am using products in my office which are mostly imported from the USA or European parts because of the quality they provide. We tried a few imports from China but they are horrible in quality and reliance. I am not sure how they did it, but it's all about bulk manufacturing which is keeping China at its peak. The only power China has is its huge population and its willingness to work with the lowest wagers that it can get.

It's hard to find countries accepting Yuan as the currency reserve. If I would have been in any of those countries, I would just shift to the country where USD is accepted. Lolz.

Anyways, China can not take over OR compete with USD for sure. USA has been in the business for ages and it can not be shifted just like that. Imagine the chaos that other countries will have to bear during such reserve.

This is why bitcoin will be a lot better because it is not on the side of anyone. It's not china, it is not Russia, it is not EU, it is not USA. It's us, the whole world, globally it is all together. This is why if you dislike America, you can buy bitcoin, if you like china then you can buy bitcoin.

Yuan, Ruble, Dollar, Euro, all should be gone and all should be forgot because they are the old news and they will not really make a profit for you neither. Nations who invest into bitcoin like El Salvador will get richer and richer, because they are going to be rich anyway due to taxes, and if they keep on investing that back into bitcoin they will be able to buy so much and when it goes up on the bull run they will make a big profit.

[DrBeer]

This is why bitcoin will be a lot better because it is not on the side of anyone. It's not china, it is not Russia, it is not EU, it is not USA. It's us, the whole world, globally it is all together. This is why if you dislike America, you can buy bitcoin, if you like china then you can buy bitcoin.

Yuan, Ruble, Dollar, Euro, all should be gone and all should be forgot because they are the old news and they will not really make a profit for you neither. Nations who invest into bitcoin like El Salvador will get richer and richer, because they are going to be rich anyway due to taxes, and if they keep on investing that back into bitcoin they will be able to buy so much and when it goes up on the bull run they will make a big profit.

that is why it will not become an international currency. For bitcoin to become such a replacement, someone has to manage it. Well, or there should be a "second pole" currency - for example, Ethereum
Although this, provided that their movement and emission will be in the hands of one or two countries. Why one or two? Because a truly multipolar world (with 3-4-5+ centers) cannot exist in today's reality. The problem is also that bitcoin, as an "unmanaged" financial instrument, is actually not needed by anyone. as well as its volatility and other "features" are not needed. But CBDC currencies - most likely will replace today's cash-non-cash form of financial relationships.

[Sayeds56]

Overall, over-reliance on the US dollar can have negative implications for countries that heavily depend on it, and the expansion of the BRICS could provide an opportunity for countries to diversify their reserves and reduce their vulnerability to fluctuations in the value of the US dollar. However, there are also potential risks associated with this shift, particularly with regard to China's growing economic and geopolitical influence

Thanks OP for initiating discussion on a very important topic, which is a major concern of all those countries who heavily rely on US Dollar for their financial stability. As the economic situation in the USA continues to change, US economic power is on decline, it is not what it used to be in earlier days. Depending on a single currency either it is US dollar, Chinese Yuan or any other one, is very risky as its fluctuation can have significant impact on economy.

In my opinion, diversification is the best solution to reduce risk associted with fluctuation in value of currency.

[Alpha Marine]

Gotta say, I'm not entirely sold on the idea that shifting focus to the yuan and other currencies is the ultimate fix for our overdependence on the good ol' US dollar. Sure, clinging to the dollar can limit a nation's international trade with countries using different currencies. But is diversification the real key?

Hold up, let's not gloss over the potential hazards linked to China's expansion of the BRICS. China's ballooning economic and geopolitical clout could fuel tensions and even conflicts between nations. And who's to say what kind of economic strings China might attach to countries that embrace the yuan?

I'm all about skepticism and critical thinking. We've gotta scrutinize the pros and cons of each move, especially when it comes to the world's economic game plan. Maybe the answer isn't diversification, but finding ways to cut our reliance on any single currency. The future's a mystery, but one thing's for sure: caution and skepticism are our best allies.

Couldn't have said it any better.
However things get, it will always be better to have a particular currency or set of currencies that should be used for international trade. Everybody cannot be trading in his own local currency. So if the dollar is not the answer, does that make the yuan the answer?

The dollar has built trust. Countries trust the dollar enough to use it as their reserve currency. They didn't trust this currency simply because it's the currency of the United State, they choose this currency because it's a strong currency that doesn't devalue so much compared to other currencies. The Euro is also a reserve currency.
Despite the crises of the dollar, it's still the first world reserve currency before the Euro and then the yuan. This is because people still trust the dollar, so they are not just about to start dumping it because Russia and China say so. If China wants the yuan to be the first reserve currency then they have to show the world that the currency can maintain its value.

I believe countries that do not produce much, or should I say countries that import almost everything get affected the most by the upward and downward movement of the dollar. This is why developing countries that import almost everything suffer. The price of the dollar affects every single commodity in their country and instead of them looking inwards and finding a way to get better and start producing stuff they need, they blame the dollar. It's always easier to blame others for our misfortune but if we are being honest, the real issue lies within us.

[Hispo]

Overall, over-reliance on the US dollar can have negative implications for countries that heavily depend on it, and the expansion of the BRICS could provide an opportunity for countries to diversify their reserves and reduce their vulnerability to fluctuations in the value of the US dollar. However, there are also potential risks associated with this shift, particularly with regard to China's growing economic and geopolitical influence

Thanks OP for initiating discussion on a very important topic, which is a major concern of all those countries who heavily rely on US Dollar for their financial stability. As the economic situation in the USA continues to change, US economic power is on decline, it is not what it used to be in earlier days. Depending on a single currency either it is US dollar, Chinese Yuan or any other one, is very risky as its fluctuation can have significant impact on economy.

In my opinion, diversification is the best solution to reduce risk associted with fluctuation in value of currency.

While I agree with you, I must also say that there are not many currencies for the Nation treasuries to diversify. It is mostly, the American Dollar, Euro, Yen Britain Pound and not much more. Gold is also an option but my point is that the American dollar had become the reserve currency because the ease and advantage it had/has.

It was accepted worldwide and one only had to be aware on the economics of a single country.

I still believe it is too early to say the American dollar is done for good, I think there is still a good chance of the USA economy to shine again, if the politicians do not mess up with the debt ceiling during this summer, otherwise things can degenerate very quick.

[DrBeer]

Gotta say, I'm not entirely sold on the idea that shifting focus to the yuan and other currencies is the ultimate fix for our overdependence on the good ol' US dollar. Sure, clinging to the dollar can limit a nation's international trade with countries using different currencies. But is diversification the real key?

Hold up, let's not gloss over the potential hazards linked to China's expansion of the BRICS. China's ballooning economic and geopolitical clout could fuel tensions and even conflicts between nations. And who's to say what kind of economic strings China might attach to countries that embrace the yuan?

I'm all about skepticism and critical thinking. We've gotta scrutinize the pros and cons of each move, especially when it comes to the world's economic game plan. Maybe the answer isn't diversification, but finding ways to cut our reliance on any single currency. The future's a mystery, but one thing's for sure: caution and skepticism are our best allies.

The thing is that these "fighters against the dollar" do not quite understand what they are doing. No, I'm not talking about China This is about the rest of the BRICS members.
And as you rightly noted - they are on a wave of hysteria "we will punish the United States for the fact that we cannot produce anything normally and competitively," they do not even notice how they are being pulled into China's black hole. And getting out of there will be almost impossible, or very difficult, with dire consequences / stress for their economies. Believe me - in a few years, at least some of the economies of the BRICS countries will be one memory. They will all become China's donors, and sinkholes for yuan inflation.

The essence of the problem is that the world economy needs some kind of unified means of payment. Now it's a dollar. In fact, it is the blood of the world economy. Yes, it works for the US. But this does not create real problems, except for the rogue countries, countries under sanctions, and today's China, which replaced Russia on the bipolar globe, and which has problems with the economy.
And diversification, i.e. the introduction of 5-10 other settlement currencies will really create inconvenience and problems for players in the world market!

PS You will laugh - but 4-6 months ago, when this hysteria began, I said - that there will be no multi-currency exchanges in these countries, there will be only RMB, and because China needs it. He will be the "master" of this union, and all the rest of his obedient servants...

[Gun Boat]

Gotta say, I'm not entirely sold on the idea that shifting focus to the yuan and other currencies is the ultimate fix for our overdependence on the good ol' US dollar. Sure, clinging to the dollar can limit a nation's international trade with countries using different currencies. But is diversification the real key?

Hold up, let's not gloss over the potential hazards linked to China's expansion of the BRICS. China's ballooning economic and geopolitical clout could fuel tensions and even conflicts between nations. And who's to say what kind of economic strings China might attach to countries that embrace the yuan?

I'm all about skepticism and critical thinking. We've gotta scrutinize the pros and cons of each move, especially when it comes to the world's economic game plan. Maybe the answer isn't diversification, but finding ways to cut our reliance on any single currency. The future's a mystery, but one thing's for sure: caution and skepticism are our best allies.

Couldn't have said it any better.
However things get, it will always be better to have a particular currency or set of currencies that should be used for international trade. Everybody cannot be trading in his own local currency. So if the dollar is not the answer, does that make the yuan the answer?

The dollar has built trust. Countries trust the dollar enough to use it as their reserve currency. They didn't trust this currency simply because it's the currency of the United State, they choose this currency because it's a strong currency that doesn't devalue so much compared to other currencies. The Euro is also a reserve currency.
Despite the crises of the dollar, it's still the first world reserve currency before the Euro and then the yuan. This is because people still trust the dollar, so they are not just about to start dumping it because Russia and China say so. If China wants the yuan to be the first reserve currency then they have to show the world that the currency can maintain its value.

I believe countries that do not produce much, or should I say countries that import almost everything get affected the most by the upward and downward movement of the dollar. This is why developing countries that import almost everything suffer. The price of the dollar affects every single commodity in their country and instead of them looking inwards and finding a way to get better and start producing stuff they need, they blame the dollar. It's always easier to blame others for our misfortune but if we are being honest, the real issue lies within us.

It's not just right to depend on fiat... First, each one of you should go check the definition of fiat and how it originated, the meaning and what two words combines to make the word fiat.

Just to ease thing's up, it's comprises of power and control.
Fiat rather isn't backed by anything solid or sound but the government, it's quite shameful to see most of you trusting the US Dollar, yes over the years, but the US Dollar is just paper money whom they assign security tags all over it to secure it.

Meanwhile, after all of these trust for the US Dollar, they charge you hugely just to keep your money, it would make much brain if you've kept them in the pigeon hole in your house rather than the banks and government who are simply in charge.

To run away from these control and power enforced on you by the government, everyone has to know about bitcoin, my pal who Introduced me here has said this are one of the reasons bitcoin was created and they help solve and put a stop to over printing of the US Dollar, which we all fail to know that their are some fake printed dollar bills but bitcoin is authentic it can't be faked. So you all that trust the dollar has work to do.

[yhiaali3]

Couldn't have said it any better.
However things get, it will always be better to have a particular currency or set of currencies that should be used for international trade. Everybody cannot be trading in his own local currency. So if the dollar is not the answer, does that make the yuan the answer?

Yes, a very important question, is the yuan or the euro the solution? of course no!!!

In my opinion, neither the yuan nor the euro nor the ruble nor any fiat is the solution. Either diversification or a decentralized currency that is not linked to any entity, economy or institution. This is the solution, as I see it.

The transition from pegging to the dollar to pegging to any other central currency will not end the problem. Rather, all there is is that we will move from the domination of the dollar and the United States to the domination of another country, and the entire global economic situation remains linked to this economy.

So the best solution is either diversification or decentralization.

[Sayeds56]

Yes, a very important question, is the yuan or the euro the solution? of course no!!!

In my opinion, neither the yuan nor the euro nor the ruble nor any fiat is the solution. Either diversification or a decentralized currency that is not linked to any entity, economy or institution. This is the solution, as I see it.

The transition from pegging to the dollar to pegging to any other central currency will not end the problem. Rather, all there is is that we will move from the domination of the dollar and the United States to the domination of another country, and the entire global economic situation remains linked to this economy.

So the best solution is either diversification or decentralization.

Your proposal to address the issue of single currency dominance with diversification combined with decentralization is valid idea and it is widely debated in financial community. While diversification may mitigate impact of currency fluctuation but as economies are interlinked globally it won't solve the problem to some extent but not completely. Whereas decentralization is not linked to a single economy or institution but the challenge remains its widespread adoption , as well as implementation of decentralized currencies also faces challenges of regulation, security and scalability.

[Gyfts]

Do nations really need to have a financial reserve in a particular currency of a nation? What are the implications of having reserves in multiple currencies? The dollar has been very stable because the US and its allies have always controlled the world economy. Currently, more nations like China and others have built their economy and they also want to control some segments of the world's economy.

The point is diversification. Should any single currency fail, your portfolio will not entirely lose its value. USD is not stable anymore. Setting aside inflation -- more countries are becoming cautious about the U.S. governments ability to levy sanctions and forfeit assets against a particular country for their own internal political battles. Should you have USD and your country becomes barred from doing business with companies that the U.S. government has jurisdiction over, your currency loses a fair bit of value. The alternative isn't Yuan, it would be a decentralized asset. Some countries are turning to gold but IMO bitcoin would solve a lot of the issues that currency reserves have.

[worldofcoins]

Over-reliance on the US dollar can have several negative effects on countries that heavily depend on it as their primary reserve currency. With the expansion of BRICS (Brazil, Russia, India, China, South Africa), there has been a growing trend of countries diversifying their reserves away from the US dollar and towards other currencies, including the Chinese yuan.

One of the primary effects of over-reliance on the US dollar is that it can make a country vulnerable to fluctuations in the value of the dollar. If the dollar weakens, the value of the country's reserves also declines, which can have negative implications for their economy.

Furthermore, being too dependent on the US dollar can limit a country's ability to conduct international trade with other countries that use different currencies. This can lead to increased transaction costs, as well as make it more difficult to negotiate favorable trade agreements.

It remains to be seen how this development will impact the US economy and the US dollar in the coming years. Still, countries worldwide are exploring alternatives to the US dollar as their primary reserve currency.

Over-reliance on the US dollar can have several negative effects on countries that heavily depend on it as their primary reserve currency. With the expansion of BRICS (Brazil, Russia, India, China, South Africa), there has been a growing trend of countries diversifying their reserves away from the US dollar and towards other currencies, including the Chinese yuan.

One of the primary effects of over-reliance on the US dollar is that it can make a country vulnerable to fluctuations in the value of the dollar. If the dollar weakens, the value of the country's reserves also declines, which can have negative implications for their economy.

Furthermore, being too dependent on the US dollar can limit a country's ability to conduct international trade with other countries that use different currencies. This can lead to increased transaction costs, as well as make it more difficult to negotiate favorable trade agreements.

This trend may continue as governments seek to reduce their dependence on the US dollar and explore new economic and trading partnerships with other countries.

[axxo]

Ove-reliance on the US dollar can have both positive and negative effects. Some of the benefits are Stability Us dollar is widely accepted and recognized as stable currency, which can help foster confidence in global financial markets. US dollar is highly liquid  which mean it can be easily bought and sold around the world. Using single currency for international transactions can help simplify and streamline the process, reducing transaction costs and increasing efficiency. There are also potential drawbacks to over-reliance on the US dollar including Vulnerability if the US economy experiences a downturn or the value of the dollar declines significantly it could have a ripple effects throughout the global economy. Dependence and also inequity which can create imbalances in global trade and finance, as some countries may be disadvantaged by having hold large amounts of US dollars in reserve.

[kryptqnick]

The BRICS initiative seems like a joke at this point. Of course, the dollar isn't ideal and can fluctuate, but it's pretty stable, certainly better than many local fiat currencies. More importantly, dollar has a really high liquidity, it can be easily exchanged for other currencies and many other things. Russia accumulated tons of Indian rupees and is now having trouble of what to do with them because the interest in rupees is much lower than in currencies like the USD.
Finally, matters like the reserve currencies you use and loans you take have a political significance. It's a form of being friendly towards certain countries and of sharing their values.

[pooya87]

Your post is only half correct. What you are missing is the similarities between dollar and yuan. They are both terrible if a country decides to reply only on those currencies that would be controlled by "others" not them. In other words if in 10 years from now we see dollar is replaced by yuan, that world will be the exact same world as today!

The only difference at this point is that China is not using Yuan as a weapon like US does. That means many countries prefer using Yuan instead of Dollar. But so far it seems like a passing thing before they build alternative means of trade.

[MinMan]

Your post is only half correct. What you are missing is the similarities between dollar and yuan. They are both terrible if a country decides to reply only on those currencies that would be controlled by "others" not them. In other words if in 10 years from now we see dollar is replaced by yuan, that world will be the exact same world as today!

The only difference at this point is that China is not using Yuan as a weapon like US does. That means many countries prefer using Yuan instead of Dollar. But so far it seems like a passing thing before they build alternative means of trade.

This is why we are in bitcoin world, we know that every government in the world will ruin the nations and there is nothing that can bring it back and it's all terrible. Which is why we should be considering the fact that it's not going to help anyone to keep investing into these fiat currencies or hold any. I personally love crypto because neither USA government nor China prints it, they can't, they can't even control it.

The most they could ever do right now is to make sure that they are regulating it harshly if they want to, USA doesn't but China sort of does. That's all their power could do, anyone all around the world could still continue to use it anyway they want and bitcoin will continue to exist. They could just go back to their own nations and do what they can with the power they have over their own nations, we will continue to be global.

[BitcoinPanther]

Ove-reliance on the US dollar can have both positive and negative effects. Some of the benefits are Stability Us dollar is widely accepted and recognized as stable currency, which can help foster confidence in global financial markets. US dollar is highly liquid  which mean it can be easily bought and sold around the world.

I also think too, but I also understand that over-reliance on the US dollar will not have the same benefits as the @OP suggested to diversify, meaning taking advantage of other currency so that in times when US economy weaken, the country who adopted other currency will not be devastated because they have an alternative reservoir.  Aside from that, the countries capability to transact with other country will be enhanced.  the only problem I see in here is that the agreement between government where the deal might forbid a country to deal with other currency.  It is a business after all so each country wanted to have the deal alone.

Your post is only half correct. What you are missing is the similarities between dollar and yuan. They are both terrible if a country decides to reply only on those currencies that would be controlled by "others" not them. In other words if in 10 years from now we see dollar is replaced by yuan, that world will be the exact same world as today!

The only difference at this point is that China is not using Yuan as a weapon like US does. That means many countries prefer using Yuan instead of Dollar. But so far it seems like a passing thing before they build alternative means of trade.

This is why we are in bitcoin world, we know that every government in the world will ruin the nations and there is nothing that can bring it back and it's all terrible. Which is why we should be considering the fact that it's not going to help anyone to keep investing into these fiat currencies or hold any. I personally love crypto because neither USA government nor China prints it, they can't, they can't even control it.

I do not think leaders wanted to ruin their money source, so I think they wanted to maintain the country at least and prolong the duration of their benefits. 

[Fortify]

Over-reliance on the US dollar can have several negative effects on countries that heavily depend on it as their primary reserve currency. With the expansion of BRICS (Brazil, Russia, India, China, South Africa), there has been a growing trend of countries diversifying their reserves away from the US dollar and towards other currencies, including the Chinese yuan.

One of the primary effects of over-reliance on the US dollar is that it can make a country vulnerable to fluctuations in the value of the dollar. If the dollar weakens, the value of the country's reserves also declines, which can have negative implications for their economy.

Furthermore, being too dependent on the US dollar can limit a country's ability to conduct international trade with other countries that use different currencies. This can lead to increased transaction costs, as well as make it more difficult to negotiate favorable trade agreements.

In relation to China's expansion of the BRICS, their efforts to promote the use of the yuan as an alternative to the US dollar could potentially have several positive effects for countries that adopt it. For example, it could lead to increased trade with China, which is currently the world's largest exporter. It could also reduce the vulnerability of countries to fluctuations in the value of the US dollar.

However, there are also potential risks associated with China's expansion of the BRICS, particularly with regard to its geopolitical ambitions. Some countries may be concerned about the growing influence of China and its potential use of economic leverage to achieve political goals.

Overall, over-reliance on the US dollar can have negative implications for countries that heavily depend on it, and the expansion of the BRICS could provide an opportunity for countries to diversify their reserves and reduce their vulnerability to fluctuations in the value of the US dollar. However, there are also potential risks associated with this shift, particularly with regard to China's growing economic and geopolitical influence

It seems like a chicken and egg scenario. You come from the perspective that it is a bad thing, but at the end of the day there will always be a reserve currency in the world and it will ultimately be used in countries where the government has not been stable enough to guide it's own currency well. The American government is far from perfect but it is still far more transparent and flexible than some other countries like China, which leaves you in a situation where you simply accept the best of the worst. The USA will naturally try to protect its reserve currency position as it does benefit from it, but it's fairly benevolent most of the time.

[southerngentuk]

When the dollar's control shows signs of waning, some initiative will be launched to overthrow the domination that has existed. Whether the Chinese yuan will be the new reliable choice or whether the dominance of the dollar will persist over time. Either way, the common ground between the two will still have negative effects when some countries use dependencies for intermediary transactions. This affects the entire economy and politics of a country. So bitcoin is really a solution to the future of mankind when it has independence and is not controlled by any economic power.

[DrBeer]

Ove-reliance on the US dollar can have both positive and negative effects. Some of the benefits are Stability Us dollar is widely accepted and recognized as a stable currency, which can help foster confidence in global financial markets. US dollar is highly liquid which means it can be easily bought and sold around the world. Using single currency for international transactions can help simplify and streamline the process, reducing transaction costs and increasing efficiency. There are also potential drawbacks to over-reliance on the US dollar including Vulnerability if the US economy experiences a downturn or the value of the dollar declines significantly it could have a ripple effects throughout the global economy. Dependence and also inequity which can create imbalances in global trade and finance, as some countries may be disadvantaged by having hold large amounts of US dollars in reserve.

As history shows, the US economy has been and remains the most stable today. And this is not because the dollar is the world's reserve currency, but simply because the United States is really the strongest and most effective country in many areas - from politics to the army, from the consumer market to technologies that are in demand all over the world.
And only a country that meets a set of criteria will be able to replace the dollar:
1. Recognized as a leader by much of the world
2. Key positions in international politics
3. Strong, self-sufficient economy
4. Key positions in the supply of technologies to the international market
  5. Strong partnerships with major countries (economy/politicum/army/...)

As soon as such a country appears, then the issue of replacing the dollar can be considered. Before such an event, all talk is simple populism to cover up some personal "pocket" interests, but by no means a real solution to the issue of an international reserve currency.

[pooya87]

The most they could ever do right now is to make sure that they are regulating it harshly if they want to, USA doesn't but China sort of does. That's all their power could do, anyone all around the world could still continue to use it anyway they want and bitcoin will continue to exist. They could just go back to their own nations and do what they can with the power they have over their own nations, we will continue to be global.

They are all the same when it comes to being hostile towards bitcoin, the only difference is in their approach. For example the Chinese government outright banned bitcoin mining while US government restricted the hell out of the miners and even forced them into censoring transactions (like MARA pool).

At the end of the day they want full control and don't want bitcoin to even exist. But they also know they can not stop bitcoin so they try to regain at least some of that control using other means like US forcing everyone to use Coinbase for both trading and storing bitcoin. ie. full 100% control and monitoring.