The Dollar Is Not King, Says Macquarie's Wizman

De-dollarization Trends - The dollar's status as the world's reserve currency is being challenged, potentially leading to significant consequences for the US [1] - There are indications of de-dollarization occurring slowly, with reserve allocators reducing their dollar holdings [2] - Banks in China are encouraging emerging market clients to borrow in renminbi instead of dollars [3] - Private and semi-official investors, including pension funds, are diversifying away from the dollar [3] - The ECB aims to increase the prominence of the euro in international transactions, presenting an opportunity as the US disengages [11] Underlying Factors - The perception of US disengagement from the world and policy uncertainty are contributing to de-dollarization [4] - A breakdown in the perception of US exceptionalism and ordered liberty is influencing investors' views on the dollar [5] - Policy uncertainty emanating from the US, including fiscal and social tensions, affects how foreign investors perceive the US [15] Dimensions of De-dollarization - De-dollarization encompasses multiple aspects, including reduced dollar financing, trade invoicing, and reserve holdings [8][9] - The Bank for International Settlements assesses dollar usage across five dimensions, most of which have shown a slow decline in recent years [8][9] Potential Countermeasures and Reversal - Reversing policy uncertainty and moving towards trade liberty could help reverse the de-dollarization trend [14] - Increased European integration, such as joint bond issuance and unified policies, could strengthen the euro's international role [13] - While Federal Reserve rate hikes might temporarily support the dollar's value, they may not counteract the long-term structural trend of de-dollarization [7]