By Doug Young – 12 August 2023

declining dollar


In recent months, a growing concern has emerged within financial circles as experts warn of an imminent devaluation of the US dollar.

Referred to as ‘de-dollarization,’ this potential downward spiral in the value of the world’s reserve currency could have far-reaching consequences for both the American and global economies.

The US dollar has long held its position as the primary currency for international transactions, serving as the backbone of global trade and finance. However, mounting economic pressures and shifting geopolitical dynamics have put this hegemonic status at risk.

The increasing calls for de-dollarization signal a loss of confidence in the dollar’s stability and its role as a safe haven asset.

The Implications of De-dollarization

The implications of a devalued US dollar are profound. For American consumers, a weakened currency would result in higher import prices, fuelling inflation and eroding purchasing power. Goods and services from abroad would become more expensive, hitting the average American’s wallet directly.

In addition, a devaluation could lead to even higher interest rates, making borrowing more costly and potentially stunting economic growth.

Beyond the domestic impact, de-dollarization carries global consequences. Many countries, especially those with significant holdings of US dollars, would face substantial losses. As the dollar depreciates, the value of their reserves diminishes, potentially triggering a chain reaction of financial instability.

Emerging economies, in particular, could find themselves grappling with currency devaluations, capital flight, and reduced access to international financing.

Moreover, de-dollarization could disrupt the established international trade system, as countries seek alternatives to the US dollar for conducting transactions. This shift could undermine the dollar’s dominance and reshape global financial architecture.

In turn, it could impact the United States’ ability to influence global economic policies, diminishing its role as a global economic leader.
While the exact timeline and magnitude of the devaluation remain uncertain, the growing chorus of voices advocating de-dollarization demands attention.

Can De-Dollarization Be Avoided?

Governments, central banks, and market participants worldwide are closely monitoring these developments, seeking to safeguard their economies against potential shocks.

As the United States and the world brace for this looming devaluation, policymakers face the challenge of restoring confidence in the US dollar and mitigating the potential fallout.

Discussions around monetary policy, fiscal stimulus, and international cooperation have taken center stage in the quest to stabilize the global monetary system and protect against the economic damage that de-dollarization may unleash.


The prospect of de-dollarization and the impending devaluation of the US dollar pose significant risks to both the American and global economies. The potential consequences range from higher import prices and inflation for US consumers to financial instability and trade disruptions on a global scale.

As the world watches and waits, all eyes are on policymakers to navigate these challenges and safeguard the stability of the international financial system.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any government or financial institution.