The U.S. dollar is confronting one of the most significant challenges in its history: a group of 11 countries has opted to abandon its use in international trade transactions. These nations, part of the Commonwealth of Independent States (CIS), are striving to bolster their local currencies, reduce dependency on the dollar, and enhance their competitiveness in the foreign exchange markets.
This shift is a part of a growing trend known as “dedollarization,” which gained momentum after the United States imposed sanctions on Russia in 2022. The transition aims not only for financial autonomy but also holds the potential to significantly alter the global economic balance.
With 85% of cross-border transactions already conducted in local currencies, CIS leaders have emphasized that this decision strengthens their nations’ economic sovereignty and opens up new fiscal opportunities.Farewell to the Dollar: All transactions have been halted, and bills of any denomination are no longer usable in this country.
Countries Saying Goodbye to the U.S. Dollar
A total of 12 countries have decided to no longer use the U.S. dollar for international transactions. So, which countries have abandoned the dollar and why? The countries making up the Commonwealth of Independent States (CIS) include:
- Armenia
- Azerbaijan
- Belarus
- Kazakhstan
- Kyrgyzstan
- Moldova
- Russia
- Tajikistan
- Turkmenistan
- Uzbekistan
- Ukraine
Despite recent conflicts between Ukraine and Russia, most of these nations have maintained close economic agreements and have decided to join this initiative.
Reasons Behind Abandoning the Dollar
The decision to move away from the dollar is driven not only by political motives but also by economic considerations. By reducing their reliance on the American currency, these nations aim to:
- Strengthen their own economic stability
- Promote local currencies
- Enhance regional economic cooperation
Countries are actively working to strengthen their local currencies in the foreign exchange market to avoid the adverse effects of international sanctions and diversify their reserves with assets like gold.
In the words of Russian President Vladimir Putin, “The use of national currencies in mutual payments is expanding. Their share in trade operations among CIS members already exceeds 85%.” This strategic decision by Russia and 10 other countries could significantly impact the U.S. dollar.
What Impact Will De-dollarization Have on Global Trade?
The move towards de-dollarization signals a major shift in the global financial system. By reducing reliance on the dollar, CIS countries could:
- Reduce U.S. influence in the global economy.
- Create new markets based on local currencies.
- Achieve greater economic stability amid dollar fluctuations.
However, this shift might also pose challenges for the U.S. currency. A decrease in demand for dollars in international trade could lower its value and impact its role as the leading global reserve currency.
