US Treasury Secretary Upholds Dollar Dominance Amid De-Dollarization Push

US Treasury Secretary Upholds Dollar Dominance Amid De-Dollarization Push

US Treasury Secretary Janet Yellen has staunchly defended the continued dominance of the US dollar on the global stage, countering the growing de-dollarization movement spearheaded by emerging markets.  Brazilian President Luiz Inácio Lula da Silva is set to raise the issue of de-dollarization at the next BRICS meeting. Speaking at a high-level summit on global finance in Paris, Yellen emphasized the reasons behind the widespread usage of the greenback in international trade.

Yellen Defends Global Hegemony of the US Dollar 

US Treasury Secretary Janet Yellen defended the global dominance of the US dollar on Friday at a press conference in Paris, where she attended a summit on global finance hosted by French President Emmanuel Macron. Brazilian President Luiz Inácio Lula da Silva, who also attended the summit, appeared on a panel with South African President Cyril Ramaphosa. 

Yellen's defense of the US dollar's hegemony came in response to Brazilian President Luiz Inácio Lula da Silva's recent call for countries to break away from the USD and explore trading in their national currencies or other alternatives. Lula is expected to further champion this cause at the upcoming BRICS meeting, where the issue of de-dollarization will take center stage.

Joined by South African President Cyril Ramaphosa, Lula reiterated his concerns over the disadvantages faced by countries like Brazil due to their reliance on the US dollar in global trade. Ramaphosa, acknowledging the significance of the matter, confirmed that "the issue of currency" would be high "on the agenda" for the forthcoming BRICS meeting in August, the Financial Times reported. Brazil, Russia, India, China, and South Africa are the BRICS member nations.

Addressing the rising de-dollarization sentiments among emerging markets, Yellen acknowledged the difficulties in finding a viable substitute for the US dollar, which has reigned supreme in international trade for decades. The treasury secretary was quoted as saying:

"There is a very good reason why the dollar is used widely in trade and that’s because we have deep, liquid, open capital markets, rule of law and long and deep financial instruments."

Emerging Markets Seeks Alternatives to Dollar Supremacy 

While steadfastly defending the US dollar, Yellen acknowledged  in April that over time, the use of financial sanctions “could undermine the hegemony of the dollar.” Moreover, she also acknowledged this month the increasing trend of countries seeking alternatives to challenge the dollar's supremacy but emphasized that no country, including China, could fully replicate its dominance.

Simultaneously, a growing number of emerging markets, including members of the BRICS bloc and the Association of Southeast Asian Nations (ASEAN), are intensifying efforts to reduce their reliance on the US dollar. The BRICS countries are even considering the possibility of establishing a common currency, with discussions expected to take place at the upcoming summit in August.

Do you agree with Treasury Secretary Janet Yellen's stance on the enduring power of the US dollar, or do you support the emerging markets' push for alternatives? Please share your comments.