Agree, the nuance is that it’s a sign of de-dollarisation intent and direction, not de-dollarisation achieved. The dollar is still ~58% of global reserves. It would take decades.
> Agree, the nuance is that it’s a sign of de-dollarisation intent and direction, not de-dollarisation achieved.
What does "achieved" mean? The concept of de-dollarization does not entail that dollar use drops to ~0.
> The dollar is still ~58% of global reserves. It would take decades.
This seems to falsely imply that it could take decades before American consumers feel the effects, and it also overlooks the fact that there are realistic if still relatively unlikely worst-case scenarios in which the US loses its "exorbitant privilege" much faster.
The USD was ~70% of global reserves in 2000. Most of that decline isn't actually due to "de-dollarization" per se, but this is the problem: causation is really hard to untangle.
Nobody credible, for example, believes that America's rising borrowing costs are due primarily to de-dollarization, but the rising term premium does realistically reflect investors demanding more to hold US debt.
Erosion of confidence in US fiscal sustainability and institutions is one of the main drivers behind de-dollarization and because it shows up in bond markets as a risk premium, you can't cleanly separate how much of the rising term premium comes from that versus factors like Fed policy and Treasury supply.
What does "achieved" mean? The concept of de-dollarization does not entail that dollar use drops to ~0.
> The dollar is still ~58% of global reserves. It would take decades.
This seems to falsely imply that it could take decades before American consumers feel the effects, and it also overlooks the fact that there are realistic if still relatively unlikely worst-case scenarios in which the US loses its "exorbitant privilege" much faster.
The USD was ~70% of global reserves in 2000. Most of that decline isn't actually due to "de-dollarization" per se, but this is the problem: causation is really hard to untangle.
Nobody credible, for example, believes that America's rising borrowing costs are due primarily to de-dollarization, but the rising term premium does realistically reflect investors demanding more to hold US debt.
Erosion of confidence in US fiscal sustainability and institutions is one of the main drivers behind de-dollarization and because it shows up in bond markets as a risk premium, you can't cleanly separate how much of the rising term premium comes from that versus factors like Fed policy and Treasury supply.