The “Bretton Woods System 2.0” which the China Daily sees as having been in place since the creation of the petro-dollar 40 years ago, has been exposed to fundamental challenges since the beginning of 2022, the Chinese news daily writes. After the outbreak of the Ukraine conflict, the Western nations that imposed severe financial sanctions on Russia, including freezing its foreign exchange reserves, have set a process into motion which accelerates the erosion of the dollar system: “The weaponization of the dollar has aroused the concerns of other emerging market countries, and dedollarization, which used to be a marginal idea, has now become a serious policy consideration of them.
“There is no doubt that geopolitical risks, cyclical liquidity risks and inflationary crises created by the dollar system have emerged at the same time, with dire consequences. Moreover, the U.S.’ own over-indebtedness and stagflation also damage the long-term credibility of the dollar. This has led some emerging economies to reassess the role of the dollar.
“The U.S. weaponization of the dollar and trade, along with its disregard for dollar credit, has encouraged more developing countries to keep their distance from the U.S., giving Washington an incentive to build a new system.” (https://www.chinadaily.com.cn/a/202207/22/WS62d9e585a310fd2b29e6dbbd.html)
