Over the years, the U.S. dollar has been the major currency when it comes to international trade, and it has dominated the world too because when it comes to earning or receiving payment for goods and services everyone requests it has a payment due to its dominance and value. The U.S. dollar is one currency everyone recognizes and uses as backup funds, some even use it as a form of investment by storing their assets in U.S. dollars because of their value or dominance over their own country’s currency.
There has been news going on that some Asian countries have decided to leave the U.S. dollar behind and use their own currency for international trade. On one side it looks like a good idea but on the other hand, the effect of it would cause a significant shift in the world economy and world financial market.
Dumping the U.S. dollar and using their own currency might be beneficial to their country’s currency or economy but however, but the effect on the U.S. dollar could cause a short-term depreciation because the U.S. dominance and value will decrease leading to the high cost of importation and exportation of goods. Also, the U.S. dollar won’t be the leading currency anymore and will have to start fighting for value in terms of recognition in the economy and global markets.
If major countries or more countries decide to dump the U.S dollar there will be a big shift in the financial market because believe it or not 90 per cent of a country’s reserves are in U.S dollars and when there’s no need for it anymore and it has lost its dominance what will happen to the value of it and wouldn’t it cause a huge loss to the country? However, not just countries will experience loss or decrease in their reserve value, individuals who have stored their assets or savings in dollars because of its dominance will also experience loss too in the value of their assets.