A new report on global security indicated that the U.S. dollar could be toppled by other currencies shortly as "very powerful countries" are starting to shun the usage of the strong currency.
According to CNBC, Anne Korin of the Institute for the Analysis of Global Security warned that some of the European Union, Russia, and China, have all expressed "motivation to de-dollarize" shortly.
While Korin noted that it has yet to be revealed what happens since the U.S. dollar is still the strongest global currency available, the "growing club of countries" seeking to abandon dollar use are determined to achieve their goals.
The security think tank further suggested that one of the main reasons why more countries are abandoning the U.S. dollar is due to the restrictions and jurisdiction constraints in dollar transactions.
For the European Union, Korin explained that it has been vocal about doing business with Iran. However, the United States has had high-tension ties with Iran and this could be a driving force for the bloc to de-dollarize so it can transact with Iran.
As for China, there have been previous reports that the world's second-largest economy is reportedly preparing the yuan in a bid to pay for imported crude products using the local currency instead of the dominant dollar.
Meanwhile, some finance experts have expressed fears about the "weaponization" of the U.S. dollar, especially with the U.S. government's increasing reliance on militarization.
While the Chinese yuan may still be some years away from challenging the U.S. dollar in global foreign-exchange use, the White House's weaponization of the American currency could pose a serious threat to the dollar's dominance, especially with competition from China and other developed countries.
In 2013, G7 finance leaders, including central-bank governors and ministers, pledged to never target exchange rates. However, industry analysts noted that U.S. President Donald Trump appears to have violated this promise.
Trump has been pressuring the U.S. Federal Reserve to slash interest rates and also intervened multiple times on talk that would depreciate the currency. This is not good news for the U.S. dollar's global dominance, experts said.
Amid ongoing debates about the U.S. dollar's role in lifting a slowing global economy, some analysts noted that the currency's strength may be getting in the way of helping ease a global recession.
China largely played a role in driving economic growth following the 2008 global financial breakdown, the country's economy has also yet to recover, which has led some economists to look at the U.S. dollar for action.
Some experts believe weakening the U.S. dollar will help ease some monetary difficulties and market shakiness. It remains to be seen whether the Fed's latest cut will help ease the burdens of struggling markets.
