The Managing Director of the International Monetary Fund, Kristalina Georgieva, has stated that there should be no rush to do away with the American greenback just yet as many countries are aiming at pursuing de-dollarisation.
She noted that this was because of the strength and depth of the United States and its capital markets.
“We don’t expect a rapid shift in reserves because the reason the dollar is a reserve currency is because of the strength of the US economy and the depth of its capital markets.
“Don’t kiss your dollars goodbye just yet,” she said whiles speaking at the Qatar Economic Forum in Doha, organised by Bloomberg.
Meanwhile, here are some countries that have ‘stopped’ using the US dollar for trade
The US greenback has been considered one of the most powerful currencies in the world.
But in recent times, some countries have made the decision to de-dollarize.
De-dollarisation refers to countries reducing their dependence on the U.S. dollar as a reserve currency, medium of exchange, or as unit of account.
Developed economies like China and Russia currently trade in their own currencies.
Also, Brazil has dropped the dollar in bilateral trade.
According to geopoliticaleconomy.com, the UAE is selling China its gas in yuan through a French company. On the other hand, Southeast Asian nations in ASEAN are de-dollarizing their trade and promoting local payment systems.
Currently, an African country, Kenya, is buying Persian Gulf oil with its own currency.
With Ghana in perspective, how long could it take for Ghana to follow this path?
Ghana’s current economic crisis is largely due to the fact that it has been shut out of the international capital market.
This means that the inflow of foreign currency, especially the dollar, has reduced significantly.
The government has, however, been relying heavily on Treasury bills.
De-dollarization could be a solution to the depreciation of Ghana’s currency in the long run.
This is because trading in one’s own currency reduces one’s exposure to currency risks and external global shocks.
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Kristalina Georgieva is the IMF Managing Director