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De-dollarization attempts will remain contained and constrained for a long time to come, Goldman Sachs says

De-dollarization attempts will remain contained and constrained for a long time to come, Goldman Sachs says

Phil Rosen

The dollar won't lose its dominance on the world stage for a long time, according to Goldman Sachs.
Threats to the greenback will remain contained and constrained, the bank said on Friday.
Strategists wrote that de-dollarization is "lots of talk (again), not a lot of action."
Attempts at de-dollarization will remain contained and constrained for the foreseeable future, according to Goldman Sachs.

In a Friday note to clients, strategists wrote that de-dollarization is "lots of talk (again), not a lot of action." Goldman acknowledged a recent uptick in media and online interest in the dollar's strength, but in the bank's view, there's little to be concerned about.

"[P]art of the Dollar's declining share can likely be attributed to regular market forces as Treasuries fell and Asian central banks sold their Dollar holdings to counter the stronger Dollar last year," strategists said.

In addition, the bank said sanctions imposed on Russia, Brazil's plans to set up yuan clearing agreements, speculation about the yuan's use in commodity trading, as well as the US banking and debt ceiling crises aren't enough to displace the role of the dollar in global reserves or in trade, even if they do spur more countries to diversify their currency holdings.

Other currencies still have to overcome many obstacles to attain the same status as the dollar, strategists maintained, including capital market depth, building trust for access and the accompanying legal framework, trade invoicing, and currency management systems.

Because these factors together are so interlinked, a challenger to the dollar won't arise for "a long time to come."

"While that is a clear risk if the US abuses its 'exorbitant privileges', we see no evidence of that in the data so far (for example, even Brazil's rising share of CNY reserves replaced CAD, not the Dollar), and our strong view is that there is currently no real contender," Goldman said.

While the dollar's status as a global reserve currency has seen a gradual erosion for two decades, its role in international trade remains unlikely to diminish anytime soon, according to a recent note from Eurizon analysts.

The dollar is estimated to account for 88% of all international transactions, while China's yuan holds a 7% share.

https://markets.businessinsider.com/news/currencies/dollar-dominance-dedollarization-goldman-sachs-china-yuan-renminbi-brazil-russia-2023-4

Do I sense a little panic in one of the chief architects of reckless monetary policy and CONFLICT OF INTEREST in our Federal Gov?

Try reversing Hanky Panky Paulson theft and releasing F&F from wards of the state. What goes around comes around. Tsk Tsk.