Is De-Dollarization Coming?

The Answer Depends On Whether You’re In Jackson Hole Or Johannesburg This Week

Peter Vanham, Nicholas Gordon  Wed, August 23, 2023

Good morning, Peter Vanham here in Geneva.

What will be the world’s future reserve currency?

That question is more relevant than it has been in years due to inflation and high interest rates in the U.S. and Europe, the crash of digital currencies, and the depreciation of emerging market currencies from the renminbi to the rupee. But depending on whether you’re in Jackson Hole or Johannesburg this week (or on one of our podcasts), the answer might be very different.

Over in the Rocky Mountains, the yearly Jackson Hole symposium mostly welcomes those rooting for the greenback: Western central bankers.

At the heart of their discussions lies the question of whether "higher-for-longer" interest rates are the right strategy to protect their currencies, or whether it’s time to pause, or even reverse course, given the risk of a recession. The likelihood of the dollar staying the world’s reserve currency will depend on getting that balance right.

On the other hand, participants at the annual BRICS summit in Johannesburg have a different outlook. The BRICS summit gathers the leaders of the world’s leading "emerging markets," including South Africa, China, India, Brazil, and Russia (although Russian President Vladimir Putin is not attending).

And the leader of the bloc’s international development bank, Dilma Roussef, left no doubt about their intentions: They want to reduce their reliance on the dollar–and introduce BRICS currencies for international payments and loans.

Amid this geoeconomic bickering, Jeremy Allaire, the CEO of cryptocurrency firm Circle, sees a third way.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/dollarization-coming-answer-depends-whether-104456598.html