A Goldman Sachs addressing the latest flare-up in de-dollarisation hysteria.
- de-dollarization is "lots of talk (again), not a lot of action"
- "While that is a clear risk if the US abuses its 'exorbitant privileges', we see no evidence of that in the data so far (for example, even Brazil's rising share of CNY reserves replaced CAD, not the Dollar), and our strong view is that there is currently no real contender,"
- part "of the Dollar's declining share can likely be attributed to regular market forces as Treasuries fell and Asian central banks sold their Dollar holdings to counter the stronger Dollar last year,"
- additionally, sanctions on Russia, Brazil's plans to set up yuan clearing agreements, speculation about the yuan's use in commodity trading, as well as the US banking and debt ceiling crises aren't enough to displace the role of the dollar in global reserves or in trade
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other currencies still have to overcome many obstacles to attaining the same status as the dollar, such as:
- capital market depth, building trust for access and the accompanying legal framework, trade invoicing, and currency management systems
