De-dollarization of the Global Economy: Implications for U.S. Hegemony

Abstract

The Bretton Wood System gave way to the financial international organizations in the post-Great War II arena when states were at the cusp of financial collapse- an abysmal situation in war-torn Europe. These international monetary organizations were established in order to manage the financial issues originating from the balance of payments and exchange rates. With the passage of time, the dollar became the international currency that ultimately strengthened the U.S.'s influence in world politics. The prominent role of the U.S. dollar in maintaining the global exchange rate paved the way for a great U.S. economy and subsequently supported its dominating position in the monetary organization. Dollar hegemony primarily relies upon military, economic, political, and international power that is improvised through market forces. Dollar hegemony corresponds with the era of Neo-liberalism and the rule-based world order; however, under the constant threat of de-dollarization by revanchist Russia and rising China, U.S. global hegemony is in a declining state. Changing pattern of international power and the emergence of new digital technology; multipolar global economic structure with a rising share of anti-US state's GDP, particularly BRICS; and development of the new international division of production cumulatively accelerating the pace of de-dollarization.