De Dollarization is happening at a Stunning Pace. India's move so far !!!!!

The exercise of de-dollarisation, which was primarily on the drawing board for decades, is now taking wings. The process  has  accelerated following the  onset of the Russo-Ukrainian war and the subsequent, unprecedented sanctions against Russia. Almost surely the principal factor driving countries to move away from the current global financial system is, the U.S. government’s ability and ever-increasing willingness to weaponize the dollar against its political adversaries and those who refuse to go along with its political program.

The establishment of an alternative global banking system by other countries like  China, India, Brazil are slowly taking steps.  Several days ago China & Brazil  has decided to  dump the U.S. dollar as an intermediary currency &  will now conduct bilateral trade in their own currencies, exchanging yuan for reais.

Beijing has similar currency deals with Russia, Turkey, Pakistan, and several other countries—and it continues to expand that list of countries. Members of the China-led Shanghai Cooperation Organization (SCO)—a bloc that consists of China, Russia, India, Pakistan, Uzbekistan, Kazakhstan, Tajikistan, and Kyrgyzstan—agreed to increase the use of their national currencies in trade between the countries.

India, also considered an ally of the United States, like China, has stepped up its efforts to internationalize its own currency, the rupee, and in doing so is helping to further the de-dollarization trend.

The Reserve Bank of India (RBI) has already given its nod to various banks from 19 countries to open Special Vostro Rupee Accounts (SVRAs) to facilitate transactions in rupees(INR ₹). Latest country joining  is  Bangladesh in addition to Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka,Tanzania, Uganda, and the United Kingdom

Many more countries have also expressed their interest in transacting in the Indian currency ₹. The global acceptance of India’s digital payment systems like the Unified Payments Interface (UPI) has been steadily increasing in the last few months.

 

The BRICS (Brazil-Russia-India-China-South Africa) block is also looking at developing a new reserve currency based on a basket of currencies of the member nations.

Many pundits have opined that the exercise to make the Indian rupee global is still just a dream at this time. There is no doubt that there are several challenges to this exercise but let us take one step at a time. The process has begun, we need to see if this can be a success.