In the world of finance, currencies go into throat-cut competition for the status of the world’s reserve currency. Until now, the US has not cared much about the de-dollarization trend. In the meantime, this trend is gaining traction around the world as a number of countries have a grudge against the US with its protectionist rhetoric, trade wars, and economic sanctions.
Recently, since the EU has entered the competition, Washington sniffs out a serious threat to the US dollar’s reign. Indeed, unlike the Venezuelan bolívar, the Russian ruble or the Iranian rial which all have been badly hurt by US sanctions, the euro is a strong contender for the title of the main world’s reserve currency. Besides, the single European currency will suit the needs of all countries affected by Washington’s protectionist policy. Even China will be pleased to replace the greenback with the euro for international transactions. Joe Biden is unlikely to ease trade tensions with Beijing, so the euro has the chance for success.
The countries under the US sanctions share the viewpoint that the euro is the most viable alternative to the US dollar. The EU policymakers have already stated their stance on de-dollarization. Brussels is pushing ahead with the idea of reinforcing the euro’s status to reduce the EU’s dependence on the US dollar. The European Commission has approved the blueprint for how to abandon the US currency.
Paolo Gentiloni, European Commissioner for the economy, said that through de-dollarization Brussels wants to safeguard the EU economy from forex shocks. Nowadays, the US currency accounts for 63% of forex reserves worldwide whereas the euro makes up just 20%.