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An economist at the world’s largest credit ratings agency says the US dollar’s global reserve currency status is now in the process of fading away.
Paul Gruenwald, Standard and Poors Global’s (S&P) chief economist, at a conference in London that the dollar “doesn’t have quite the pull it used to,” reports Reuters.
With “a fragmentation around the edges,” Gruenwald says that the US’ aggressive sanctions on Russia in response to its conflict with have prompted other countries around the world to begin trading in other currencies besides the dollar, and to start rebuilding their gold reserves.
Says the economist,
“We’ve got other things happening outside of the dollar world.”
Gruenwald also referenced the rise in trade being done in the Chinese yuan and the low financing offered by Chinese banks like the Asia Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB), which was started by BRICS, the economic coalition of Brasil, Russia, India, China and South Africa.
“The U.S. (dollar) will continue to be a leading world currency, (but) it will no longer be the dominant world currency.”
Earlier this month, former House Speaker Paul Ryan the greenback’s position as the world’s reserve currency was in jeopardy as the US government accumulates massive amounts of debt.
According to the former Wisconsin representative, the country is barrelling toward a debt crisis, one that could negatively impact the dollar’s status as the world’s most dominant reserve currency.
“So we have these leaders who are saying I am not going to do anything to stop a debt crisis in this country. And we know we have a debt crisis coming. So he’s courting disaster on that front. He’s basically harming our ability to stay as a reserve currency. He is moving us closer to a debt crisis by basically committing not to tackle this.”
