Janet Yellen Now Says Americans Should Anticipate A Decline In The USD As The World's Reserve Currency

Janet Yellen Now Says Americans Should Anticipate A Decline In The USD As The World's Reserve Currency

Bethan Moorcraft    Wed, August 16, 2023

‘A natural desire to diversify': Janet Yellen now says Americans should anticipate a decline in the USD as the world's reserve currency — here's what you need to know and how you can prepare

‘A natural desire to diversify': Janet Yellen now says Americans should anticipate a decline in the USD as the world's reserve currency — here's what you need to know and how you can prepare

The U.S. dollar saw an 8% decline in its share of global reserves in 2022 — causing some to question whether the dollar’s days of dominance are over.

Treasury Secretary Jannet Yellen gave her two cents on the matter during a congressional hearing in June — stating that no currency currently exists that could displace the greenback.

U.S. sanctions and foreign policy plays have inspired a backlash from China, Russia and other prominent countries who may be keen to dethrone the dollar.

Yellen remains adamant that “it will not be easy for any country to devise a way to get around the dollar.” She did, however, warn that the dollar’s share of global reserves may continue to decline as countries look to “diversify.”

Here’s why the topic of de-dollarization is front and center these days — and what you can do if you’re worried about the strength of the dollar.

Impact Of U.S. Sanctions

The dollar’s dominance in global trade and capital flows dates back at least 80 years — not just because the U.S. is the world’s largest economy, but also because oil and other essential commodities are priced in the greenback.

However, recent events — including the Fed’s aggressive rate hikes to stem domestic inflation, the trade war with China and the U.S. sanctions enforced after Russia’s invasion of Ukraine — have caused more countries to call for trade to be carried out in other currencies besides the U.S. dollar.

Prominent powerhouses India and the United Arab Emirates (UAE) have officially started trading with each other in their local currencies. The Indian government announced on Monday that the country’s leading petroleum refiner, Indian Oil Corp., used the local rupee to buy one million barrels of oil from the Abu Dhabi National Oil Company — not the greenback.

At the 14th BRICS Summit last year, Russian President Vladimir Putin announced measures to create a new “international currency standard.” Meanwhile, China has been urging oil producers and major exporters to accept yuan for payments, and major oil exporter Saudi Arabia has said it’s “open” to the idea of trading other currencies.

Even long-time allies, like France, have made non-dollar transactions since the U.S. ramped up its sanctions. In April, French President Emmanuel Macron said Europe must reduce its dependence on the U.S. dollar in order to keep its “strategic autonomy” and avoid becoming “vassals” (subordinate) to America.

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