The economist Nouriel Roubini has predicted the eventual demise of the U.S. dollar. But he is often known for inconsistent predictions.
The dollar has been dominant currency for decades now. Most nations store some of their reserves in USD. It is also widely used as a mode of exchange for international trade.
But economist Roubini predicted that the reign of the unipolar currency would soon end. The economist is often referred to as “Dr. Doom” after he predicted the 2008 housing bubble crash.
The Acceleration of De-Dollarisation
Roubini shared his latest opinions where he mentioned that a bipolar currency regime would replace USD dominance. He says, “Given the increased weaponization of the dollar for national security purposes, and the growing geopolitical rivalry between the west and revisionist powers such as China, Russia, Iran, and North Korea, some argue that de-dollarization will accelerate.”
The economist says America’s strict policies of imposing sanctions on its rival nations will decrease the appeal of the USD. The U.S. rival China, on the other hand, is pushing for increasing adoption of the renminbi (RMB) as the global reserve currency. He shares the example of China and Saudi Arabia using RMB for their transaction in Dec.
Following U.S. sanctions, Russia and India are also settling their trade in rupees (INR). According to a Business Standard article, India is talking with Southeast Asian, African, and Latin American nations to start INR trading.
CBCDs to Challenge USD, says Roubini
The crypto-skeptic has commented that the emergence of central bank digital currencies could lead to a multipolar currency regime. Governments globally have been pushing their versions of CBDC for the past couple of years.
Recently, China promoted its digital yuan during the Lunar New Year through initiatives totaling more than $26.6 million. Last month, the Saudi Central Bank announced that it is experimenting with a CBDC pilot.
U.S. rivals Iran and Russia are reportedly launching a gold-backed CBDC to facilitate cross-border payments.
Don’t Always Take Roubini at His Word
It is worth noting that Roubini has often been inconsistent with his predictions. After predicting the housing bubble crash, the economist predicted the S&P to fall 20% in May 2010, but the index rose more than 20% in a year.
In Aug. 2020, Roubini wrote that the reports of the USD’s demise are “greatly exaggerated.” But yesterday, he predicted the end of USD’s “exorbitant privilege” in the FT article.
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