Germany Comes Out Swinging at the U.S. Dollar
Here’s the truth: Fiat currencies don’t tend to last forever. For the U.S. dollar, this could be the case as well. The greenback could lose its dominance sooner than later.
Yes, the U.S. dollar remains the most used currency around the world. Central banks hold it, global trade is done in it, and a lot of commodities are priced in it.
But we are seeing a lot of resistance to the U.S. dollar’s dominance. This shouldn’t be taken lightly whatsoever.
Just recently, Germany’s foreign minister, Heiko Maas, came out swinging at the U.S. dollar.
“We must increase Europe’s autonomy and sovereignty in trade, economic and financial policies”, he said. “It will not be easy, but we have already begun to do it”. (Source: “Germany urges SWIFT end to US payments dominance”, Deutsche Welle, August 27, 2018.)
“It is high time to re-evaluate our partnership … Europeans must become a mainstay of the international order, a partner for all who are committed to this order”, he added.
These remarks were made toward the Society for Worldwide Interbank Financial Telecommunication (SWIFT), a financial messaging service for the global financial system that has argued that it is neutral, but tends to listen to the U.S.
iStock.com/Andrei Barmashov
Making Sense of It All…
This is the first time in a while where an official in power in Europe has questioned the U.S. dollar-dominated financial system and has said that it is working to build an alternative.
If Europe is able to build something like SWIFT on its own, chances are very high that it won’t use the U.S. dollar. It could use the euro. It would have more incentive to do so.
This would dampen the demand for the U.S. dollar immensely. Just imagine what would happen if a major economic hub in the global economy stops using the U.S. dollar.
Looking Beyond Europe
