This is a reversal for the US dollar. After a multi-year period of strength against other currencies, the dollar is losing ground against other currencies. The dollar index, which compares the greenback to six currencies – including the euro, the Japanese yen and the Swiss franc – has lost more than 10% since March.

The less attractive dollar
Several explanations for this. First, a chaotic management of the health crisis in the United States, the prospect of mass unemployment, and the American federal deficit which has exploded. Very recently, the announcements of the FED, the American central bank, which promises to be ready to tolerate periods with a rise in inflation – drove home the point: a weakening of the attraction for the dollar.

Another explanatory factor, the dollar considered as a safe haven, and therefore prized in times of crisis will necessarily be less so – and less and less so – as the prospects for economic recovery improve. Does this sign the end of the supremacy of the dollar, as a reference currency? Interview with Xavier Dupret, from the Joseph Jacquemotte Foundation.

The dollar is not about to lose its supremacy. And both Washington and Beijing are aware of this. For several reasons: the dollar provides access to the American economy, which remains the world's largest consumer market. It remains important. The financial markets there are deeper, more liquid and freer than in Russia or China, for example.

There is some dollar stability, too. But this factor is likely to hamper the supremacy of the dollar in the medium term. For strictly economic reasons – like the American level of indebtedness, whether public or private.

But this will take time.

Absolutely, the “reserve” phenomenon on currencies always reaches the real economy with a certain delay. The day when China will be an industrial power completely comparable to the United States, the dollar will remain, at least for a time, dominant in the reserves.

In the early 1950s, the obvious Western power was the United States. But for reasons of accumulation and habits, it is the pound sterling which dominates in international reserves. And it will be necessary to wait for the 1960s and 1970s to see the dollar occupy a predominant place in international monetary relations.

Aren't the dollars still used to import - especially from the United States - goods with high added value?

Yes, but with the current Chinese strategy of upgrading local industry, it will no doubt be possible to pay in yuan for goods with very high added value, in the next 5 to 10 years. An example: the project to build the DS9 – from the PSA group, Peugeot! – a premium car, a large sedan, which was to be released in March. It will be entirely built in China. A premium, global, Chinese car.

The share of the dollar in bilateral trade between Russia and China fell in 2020 below 50%. Five years ago this share was still… 90%. What does that mean ?

That the once ultra-dominant dollar in trade between these two countries is now marginalized. We are witnessing a de-dollarization of these exchanges.

For Russia, this movement began in 2015 in the wake of the annexation of Crimea. The acceleration occurs from 2017 with the emergence of the Trade War between China and the United States. So there has been a deepening of this dedollarization movement, which is now probably reaching a peak.

One can speak objectively of a financial alliance between Russia and China. An alliance which was geopolitical, economic, military, which will perhaps be industrial tomorrow, but which in any case today, is already financial. In the event of a future, possibly different, US administration that eases trade relations with China, this alliance could remain at the current stage.

What concrete interest do these two countries have in turning away from the dollar?

The advantage of avoiding the dollar is quite simply that the American government cannot ask one of "its" banks to block a transaction on the pretext that these countries are under sanctions. Their exchanges are therefore completely free and sovereign. No US bank or regulatory entity is involved in these exchanges.

And the next step in this merger is undoubtedly the establishment of an alternative payment system to Swift (Society for Worldwide Interbank Financial Telecommunication, a company under Belgian law, owned by the world's largest players in the banking sector, NDR) . Since as soon as economic operators exchange dollars, there is necessarily at some point in the transaction, an American bank linked to the SWIFT system which is involved.