https://archive.is/2023.04.18-152454/https://www.bloomberg.com/news/articles/2023-04-18/de-dollarization-is-happening-at-a-stunning-pace-jen-says?leadSource=uverify%20wall
The greenback’s share in global reserves slid last year at 10 times the average speed of the past two decades as a number of countries looked for alternatives after Russia’s invasion of Ukraine triggered sanctions, Jen and his Eurizon SLJ Capital Ltd. colleague Joana Freire wrote in a note. Adjusting for exchange rate movements, the dollar has lost about 11% of its market share since 2016 and double that amount since 2008, they said.
“The dollar suffered a stunning collapse in 2022 in its market share as a reserve currency, presumably due to its muscular use of sanctions,” Jen and Freire wrote. “Exceptional actions taken by the US and its allies against Russia have startled large reserve-holding countries,” most of which are emerging economies from the so-called Global South, they said.
There are a ton of secondary markets that take USD. The real problem is that electronic transfers are dominating the modern finance economy. And with US control over SWIFT exchanges, its easier than ever to track chain-of-custody on a transaction so that you can punish the guy who traded with the guy who traded with the guy who traded with the sanctioned individual.
Because bigger banks can immunize themselves against these sanctions (HSBC, for instance, gets to do all the crimes it wants without serious consequences), this facilitates the consolidation of the financial sector in fewer hands.
But because these financial centers also play a role in amplifying conflicts abroad, they run counter to the leadership of foreign nations - like China and Russia and a big swath of Latin America and Africa.
Its the consolidation and selective enforcement that's really driving this split. Back when you could just black market all your transactions in cash, through a dozen SVB sized banks, it wouldn't have been worth the effort to start your own regional electronic banking network. Putin could keep some overseas cash in a UK bank and nobody would know or care for the same reason nobody seemed to care that Wirecard was run out of a dog trimming shop in the Philippines.
But now there's a real incentive to being at the center of the spider's web.