THE collapse of three United States banks in the past week has laid bare the shrinking role of the United States dollar as a global reference currency, while also confirming that global economic power is not immune to external shocks.
When UK banking giant HSBS snatched United States’ Silicon Valley Bank (SVB) Unit for just one dollar it went through as just another financial blip that United States President Joe Biden promised to fix without any further elaboration, casting the spotlight on the deep-seated challenges underlying the US economy.
SVB is one of the two banks to collapse in the US, causing a severe run on deposits and plunging the US dollar value to record lows against major global currencies.
Economist Mr Luxon Zembe noted that the US Dollar’s dominance as a global reference and reserve currency for centuries is fading while global superpowers like China, Russia and India have ditched the greenback as a settlement currency, preferring to trade in their currencies.
“It’s for everyone to see that the powers are shifting and once the US Dollar for years has dominated giving the US government power of influence and dominance over other countries, this financial crisis in the US lay bare what it is to come in terms of the diminishing role of the US Dollar and the political dominance of the US as a global superpower,” he said.
Political analyst Mr Gibson Nyikadzino says the recent economic developments in the US confirm that a new world order is evolving under the cracking US hegemony.
“There has been a surge in trade between BRICS countries and for instance, INDIA has increased its crude oil imports from Russia from less than 5% to nearly 20% and these are being settled in rubles. It tells you that the era of dominance by the US is no longer the same,” he said.
It is the West’s unquenchable thirst to dominate that triggered the Russian Special Military Operation in Ukraine, prompting the coalescence of the BRICS economic bloc as more countries are considering joining the global economic grouping.
The joint sanctions imposed on Russia by the European Union and the US have had no meaningful impact on the economy and instead have seen the Russian ruble gaining in value while oil trades involving Russian crude have largely been settled in currencies other than the US.
Could this be the end of the US global dominance in the world’s political and economic affairs in the wake of the looming new world order? Only time will tell.