De-Dollarization Myth Busted: BoA Strategist Reveals Global Dollarization Surge

The dollar''s demise was greatly exaggerated—again.

Bank of America''s latest analysis flips the script on de-dollarization chatter, revealing the greenback is tightening its grip on global trade. Who could''ve seen that coming?

King Dollar''s Comeback Tour

While crypto maximalists and gold bugs predicted the dollar''s downfall, institutions kept stacking USD reserves like there''s no tomorrow. The ''barbarous relic'' of fiat just won''t quit.

Geopolitical Theater Meets Hard Currency

All those BRICS memecoins and bilateral trade agreements? Turns out they''re just theatrical backdrops while the real show happens in dollar-denominated oil contracts and Eurodollar markets.

Another quarter, another reminder that when the music stops, everyone still wants a chair labeled ''USD''—no matter how much they complain about the Fed''s monetary policy.

De-Dollarization Just A Temporary Inconvenience?

There is a sentiment that the US dollar is losing steam. The figures also seem to support this notion. The US dollar index (DXY) is down 9.7% year-to-date. This is the lowest the figure has been since the 1980s. The dip has led to substantial concerns about asset managers and financial institutions potentially pivoting away from the US Dollar to other currencies and gold. Despite the growing worries around the greenback, there are signs that the US dollar is still the de facto leader in global trade.

According to a report by Axel, ““

To support their argument, the strategist refers to nonbank financial intermediaries. Nonbank financial intermediaries have increased their holdings to $63 trillion in 2022 as compared to the amount of $28 trillion in 2009. This increase in value shows the increasing role of the US dollar in the world economy. The dollar continues to cover about 88% of foreign exchange deals in the world.

Axel also believes that alternative digital currencies, like stablecoins, could further propel the dollar’s position. The report states, ““

It is shocking to see the constructive picture of the US dollar when anti-USD sentiments have been rising. Although the report comes as a breath of fresh air, it does not imply that the de-dollarization movement is over. It has been perceived by many analysts that the days of the USD are numbered. BlackRock CEO Larry Fink also shares this opinion. We might be witnessing a situation where countries in the future may pull out of the dollar and use local currencies to trade, or we may even start trading in new currencies yet to be created.