Nouriel Roubini, an economist known as “Dr. Doom”, has warned of the demise of the US dollar and the rise of a “bipolar” world. Roubini believes that the Chinese renminbi could be a substitute for the dollar, as new technologies such as central bank digital currencies (CBDCs) and corporate payment rails contribute to a new landscape.
Nouriel Roubini predicts the dollar’s fall from grace
Nouriel Roubini, an economist known for the accuracy of his predictions of the 2008 housing crisis, has warned of the emergence of a “bipolar monetary regime” preceded by the demise of the US dollar as the world currency. The Iranian-American economist, known as “Dr. Doom” by some due to pessimistic predictions from him, alerted readers on an article about the US dollar being replaced by the Chinese renminbi due to a series of actions the Chinese government has been taking since the Covid lockdowns.
Roubini states:
Given the increasing militarization of the dollar for national security purposes and the growing geopolitical rivalry between the West and revisionist powers like China, Russia, Iran and North Korea, some argue that de-dollarization will accelerate.
Roubini cites the growing set of restrictions the US government places on its rivals’ use of the dollar, including primary and secondary financial sanctions, as possible reasons for the rise of this bipolar system in the next decade.
Aggravating factors and de-dollarization efforts
Roubini also argues that the pseudo-adoption of the dollar by the economies of less developed countries brings disadvantages derived from the domestic management of monetary policy. This puts these countries at a disadvantage, without having a say in the issuance decisions and monetary control. Roubini states:
The current system makes emerging market economies financially and economically vulnerable to changes in US monetary policy driven by domestic factors such as inflation.
The economist also mentioned that Saudi Arabia has already settled transactions using the Chinese renminbi and that this could cause other countries in the area to follow suit.
There have already been several projects that seek to replace the dollar with international settlements. In July, the BRICS bloc revealed that it was working on creating its own currency, in a move to dethrone the influence of the US and the International Monetary Fund over their economies. In January, the presidents of Argentina and Brazil announced that they were beginning to work on a common currency that would serve as an instrument to settle payments between Mercosur and the BRICS countries.
The launch of central bank digital currencies (CBDCs) and the increasing use of private payment gateways, such as Wechat in China, will also contribute to this shift, according to Roubini.
What do you think of Roubini’s opinion on the future of the US dollar? Tell us in the comment section below.
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