Since the end of the Second World War, the U.S. dollar has been the gold standard of fiat currencies on the world stage. For decades, everyone wanted to trade in dollars as opposed to francs, rubles, marks, and loonies because of its reliability. That may change.

Is the global U.S. dollar hegemony in danger? With the latest policies being adopted by varying nations, it is safe to say that the greenback’s status as the global reserve currency is in jeopardy.

Russia Stops Trading in US Dollars

Citing the Kremlin website, RT is reporting that President Vladimir Putin has encouraged lawmakers to approve legislation that makes the ruble the primary currency of exchange at all Russian seaports by 2018. The initiative was first proposed in late 2015, but has received pushback by transport companies.

If passed, foreigners will be required to purchase rubles, which would be a boon for the Russian currency. Once the law is enacted, the Kremlin will provide a transition period before instituting ruble settlements. Until then, services in Russian seaports will remain priced in dollars.

Large transport firms are not pleased with the move. They say that they want to keep their revenues in U.S. dollars and other foreign currencies because of the high fluctuation levels in the ruble.

Since 2014, the ruble has cratered, a trend attributed to sanctions slapped on Russia by the international community over the Crimea annexation. The ruble has recovered in recent months, but sanctions still maintain a stranglehold on Moscow.

Is this an economic measure or reaction to diplomatic fallout? The latter seems more likely than the former, but the redenomination of trade could be an intriguing development moving forward.

Venezuela Stops Accepting Dollars

Venezuela is on the brink of collapse. Thanks to its socialist policies of price controls, production quotas, and nationalization of industries, Caracas is falling.

Venezuelan President Nicolas Maduro

President Nicolas Maduro refuses to take responsibility and lay the blame on the failed ideology. Because of the latest western sanctions, Maduro has located a scapegoat for his troubles: the U.S.

The socialist government announced earlier this month that it would no longer accept or send payments in dollars. The Wall Street Journal is reporting that oil traders – exporters and importers – are converting transactions into euros.

Venezuelan Vice President Tareck El Aissami said in a statement:

“To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.”

Despite the optics that benefit the Maduro regime among his supporters, experts say it will only raise costs and hurt the fragile country. Nomura debt analyst Siobhan Morden told the Fox Business Network:

“You can say whatever you want for your domestic propaganda and make it look like you’re retaliating against the U.S. This political posturing will only be to their detriment.

You’re imposing self-harm with no practical purpose.”

In other words, Maduro may present himself as a crusader against American injustice, but the redenomination will only further devastate the Venezuelan economy.

Will China Dump the Dollar?

Treasury Secretary Steven Mnuchin announced that the U.S. would implement new sanctions on China if the economic powerhouse refuses to adopt United Nations sanctions on North Korea. Mnuchin said:

“If China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the U.S. and international dollar system, and that’s quite meaningful.”

Simply put, the Trump administration wants to strain its relationship with China, isolate its biggest trading partner, and dictate terms to the world’s second-largest economy.

How foolish…

Not only has the U.S. threatened to engage in a currency war, but it is also now on the brink of a trade war.

Both sides are benefiting from trade. Last year, the U.S. exported close to $200 billion in goods and services to China and imported about $500 billion. But the U.S. needs China a lot more than China needs the U.S.

Mnuchin has threatened to prevent China from accessing the international dollar system. Today, China has several key trading partners, including Japan, South Korea, Russia, and Germany. It is highly unlikely that any of these countries would cease trading with them simply because they can’t complete transactions in the greenback.

Moreover, the yuan renminbi is the fourth-most-traded currency in the global economy. This means, according to Ryan McMaken of the Mises Institute, China is “too big too sanction.”

Such an endeavor would not annihilate the dollar, but it would add to the growing efforts worldwide: veering away from the greenback.

Signals Are Being Sent

Over the last few years, many nations have adopted a de-dollarization policy.

Since 2007, Iran has been working towards a goal of ditching the dollar. Earlier this year, Middle Eastern governments reportedly started to review the dollar pegs of their currencies. In addition to a wide array of grievances, Libyan leader Muammar Gaddafi was interested in launching a gold-backed currency with some regional partners. This did not come to fruition – we came, we saw, he died.

When you factor in Venezuela and Russia, the message becomes clear: it isn’t the 1980s and 1990s anymore; Democratic and Republican administrations can’t bully the world.

The U.S. has been successful in ousting foreign leaders who dare contend against the greenback. Unfortunately, this can’t statistically go on forever.

Eventually, the world will be overly vexed by U.S. led actions that they will not tolerate dollars and sanctions anymore. Soon, if American intervention stays the same, the rest of the world will treat Washington like a petulant child: pat its head, be condescending, and move on without it.

Do you think the dollar will stay as the global reserve currency? Let us know in the comments section!

If you would like to republish this content, click here.

Andrew Moran

Economics Correspondent at LibertyNation.com

Andrew has written extensively on economic, finance and political issues for a decade. In addition to Liberty Nation, Andrew writes for EarnForex.com, Economic Collapse News and LearnBonds. He is the author of three books, including “The War on Cash.”

Latest articles by Andrew Moran (see all)