The process of dedollarization on a global scale will be neither a fast nor an easy one, but it is definitely possible in the future, Carlos Tabunda, dean of the Faculty of International Relations at New Era University (Philippines), told Sputnik on the sidelines of the Eastern Economic Forum (EEF).
Many countries remain tightly linked to the American greenback, said the Philippine expert, which explains why the dedollarization process is still a “big challenge”.
The US currency – the dollar - remains dominant in the world economy, Carlos Tabunda pointed out, and China and Russia, along with other nations spearheading the dedollarization process, “still have a long way to go” before reliance on the greenback can be toppled.
"We have to recognize that most economies across the globe, for example like the Philippines, in Asia, remain under the control of American interests, and they are tightly linked to the dollar. I do not think that this [dedollarization] will be quick, or easy for these economies, seeking to break with the dollar," Tabunda maintained.
Ways to sidestep the dollar and Western-dominated financial institutions via expanded trade in local currencies have been among the key items on the agenda of last month's three-day summit of the BRICS group of major emerging economies - Brazil, Russia, India, China and South Africa - which wrapped up on August 24 in Johannesburg. The gathering ended with an announced expansion, with Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the United Arab Emirates invited to join the club. At the event, BRICS stressed the importance of encouraging the use of local currencies in international trade and financial transactions between members of the group as well as their trading partners.
This shift from dollar use took on a new significance amid expanded weaponization of the major reserve currency by Washington in order to achieve its geopolitical objectives. Furthermore, the dollar’s increasingly perilous global position amid prospects of a recession in the United States has also fueled the dollar-ditching debate.
Looking ahead, Tabunda believes that dedollarization is a viable possibility.
"Perhaps in the future, [yes]... We currently see that the process of dedollarization faces many challenges,” the Philippine International Relations expert underscored.
However, if these obstacles are removed, and countries that are deeply connected to the dollar begin to abandon it, and embrace the dedollarization process along with related projects wholeheartedly, then in that case, “it will be successful," Tabunda predicted.