Reducing Dominance of the US Dollar

Strategic Council Online - Head of the Economic Commission of the Strategic Council on Foreign Relations stated that the dollar, as the dominant currency is set to lose its position.

Dr Ebrahim Sheibani, in an interview with the website of the Strategic Council on Foreign Relations, referred to the areas that led to the dominance of the US dollar over current international trade relations and explained the advantages that dollar’s domination has created for the United States, using the currency as a military weapon and imposing sanctions on other countries, including Iran, and pointed out that the global dominance of the dollar allowed the United States to print dollars when it faced a budget deficit, and that foreign countries, such as the Arab states of the Persian Gulf, would accept it, thus the money is taken out of the country and no inflation is caused. The United States has greatly benefited from this privilege and is now abusing it.

The former head of the Central Bank added that dollar is still the dominant international currency, adding: The price of a barrel of oil is still announced in dollars and the euro still cannot pull this load, because the production of the whole euro area is not enough to provide for example currency for the trade of 90 million barrels per day. Also, all international tenders and transactions are done in dollars.

Referring to the separation of gold backing from the dollar in 1971 and the replacement of the American commodities in place of gold as backing for the dollar, Sheibani said: The United States did not take advantage of the dollar’s dominance in those early days, but it gradually dealt a blow on itself, because the world is now realizing what harm the dollar can do in this way.

Countries pessimistic about the dollar

He continued: I remember when I visited Singapore as the head of the Central Bank; I said in an interview that true the United States is putting pressure on us, but in the future, the position of the dollar as an international currency will be completely damaged and the countries will become pessimistic about it. This is happening now.

The head of the Economic Commission of the Strategic Council on Foreign Relations explained: Currently, only 30-40 per cent of the financial reserves of the countries are in dollars, among countries such as the Persian Gulf states, which are mostly dependent on the United States. At that time, 70% of the world’s monetary reserves were in US dollars.

Change in balance of power, detrimental to the US

Emphasizing that the balance is now shifting to the detriment of the US dollar, Sheibani said: The current dominance of the US dollar has been weakened and will further weaken in the future; they themselves are aware of this and are afraid of it because they will lose this great lever. In his new book, “The Room Where It Happened”, John Bolton has pointed out that they are using this great power they have, while in the future such a power may not exist.

The dollar will lose its prestige

Dr Sheibani added: It seems that in the next 10 to 15 years, the balance will change to the detriment of the US dollar. It is anticipated that China will be the world’s largest economy in the next 15 to 20 years, and some forecasts put it even shorter. India and Indonesia are next in some estimates; therefore, it is very likely that the dollar will lose its prestige, as economists and global centres predict. This is not just because of the political upheaval, but because of the economic upheaval that is taking place, which will make the United States a second-rate, not a first-rate, power.

He continued: They are still using this leverage and especially putting pressure on our country in this way. The system they have created is still working in their favour, but if you look at the statistics, you will see that this dominance is decreasing year by year.

As for the solutions and countermeasures of Iran, as a country targeted by this economic weapon, Sheibani also said: All the countries are looking for a solution, and we are currently doing our business in another way; we either settle accounts or bring other currencies into our transactions. Indeed, the euro is politically following the dollar, but this will not continue, especially that East Asia is booming.

Need to pay attention to monetary agreements and cryptocurrencies

Underlining the importance of monetary agreements between countries, he added: China and Russia have signed bilateral agreements worth about 400 billion dollars, and now about 50 countries have concluded monetary agreements with each other.

Sheibani also referred to international exchanges worth about 1.2 trillion dollars with cryptocurrencies, saying: Of course, governments and central banks still do not widely recognize cryptocurrencies, because, for example, the value of bitcoin fell by 17 per cent last week. For this reason, some caution should be exercised; but in any way, the shift of economic power from the West and the United States to the East, monetary agreements and the advent of cryptocurrencies are all factors that not only our country, but all countries in the world can use and gradually distance themselves from the dollar, and they have done so.

The member of the Strategic Council on Foreign Relations blamed US measures in sanctioning countries and freezing their assets as a factor leading to the awareness of nations that such actions are political and said: Countries have realized that dollar has no economic aspect and can absolutely cause trouble; for this reason, they distance themselves from it and diversify their currency portfolio.

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