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An issue with dollar as international trade currency is that all transactions are performed via US banks. And US is not a reliable party anymore, because they c

An issue with dollar as international trade currency is that all transactions are performed via US banks. And US is not a reliable party anymore, because they could freeze your accounts or decline your transaction if they don't like something about you. So governments which want to have some degree of freedom and independence in their actions will naturally move to other currencies. Good alternative could be a P2P currency which does not require any particular center to handle a transaction. Switching dollar to ruble or yuan does not seem like it could change something drastically. Though I don't really understand why governments need a single currency. Just use your own currency and exchange other currencies, it'll settle down eventually.

zamnos 4y ago
The problem is it doesn't. It does balance out if you're a big wealthy nation with imports and exports. If you're a small poor nation with limited resources, money only ever flows out, and barely ever in, depleting the nation's treasury.
- throwawaylinux 4y ago
  If they are instead buying things with US dollars, where do those dollars come from?
  - stephen_g 4y ago
    Often things like IMF loans that massively burden countries with debt to first world countries - with the money mostly going into infrastructure for extractive industries like mining so the countries who indebted them can buy their resources cheap, and also get to suck extra money out of their economy for the interest payments. These kind of things often just happen to end up that the people of a nation end up with the burden of the debt, austerity, etc. while a smaller group of well connected people and companies end up with the benefits.
    - pas 4y ago
      US trade balance is negative for decades, exactly because dollars go to developing countries (in the form of direct investment and also as the classic paying for things, and also because tourists leaving hard cash at the locals) IMF loans are better than austerity. and structural reforms as conditions of IMF loans are better than selling natural resource extraction rights for 99 years to private companies. are these development programs perfect? of course not, but the mindless and ignorant vilification is just propaganda at this point.
      - chii 4y ago
        These vilification are propaganda, likely covert operations from places like china or russia. The IMF is no saint, but they at least is looking to improve things, despite not acting altruistically. Their loans are contingent on economic reforms - e.g., Pakistan's default is in part due to state subsidies and inefficient tax allocation, etc. In the short term, reforming these things looks like causing of suffering for the population, but so does alcohol/drug withdrawal. In the long term, it produces a better economic outcome imho. Contrast this with stuff like the Belt and Road initiative.
        throwawaylinux 4y ago
        > These vilification are propaganda, likely covert operations from places like china or russia. Source? > The IMF is no saint, but they at least is looking to improve things, despite not acting altruistically. Should I consider you likely covert operation from China or Russia because of the accusation that IMF is no saint and does not act altruistically?
        my_city 4y ago
        [dead]
raverbashing 4y ago
> issue with dollar as international trade currency is that all transactions are performed via US banks Not necessarily. The US dollar is fully convertible and several countries offer accounts in USD (though a lot of places rely happily on SWIFT)
- renonce 4y ago
  Non US banks have to deposit their dollars to a US bank that actually handles transactions and decides if a transaction can go on or not.
  - sgjohnson 4y ago
    This is not true. Eurodollars exist.
  - skissane 4y ago
    There’s nothing stopping a non-US bank having a vault full of actual US currency backing its US-denominated accounts. And settling transactions by sending physical cash on a plane. It is more expensive than using a US bank which makes it much more electronic, but has the advantage that the US government cannot stop it except by shooting down that plane
GTP 4y ago
>Though I don't really understand why governments need a single currency. Just use your own currency and exchange other currencies, it'll settle down eventually. Because commerce is much easier if everyone uses the same currency, plus the more countries use a currency the more stable the currency gets. This where two big reasons why in EU most countries decided to use Euro.
- atlantic 4y ago
  It's not that commerce is easier: currency exchange is pretty frictionless nowadays. It's that the value of inputs and outputs, which are critical to running a company doing part of its business abroad, or buing inputs from abroad, is much easier to calculate without having to account for exchange rate fluctuations.
  - ethbr0 4y ago
    I'd put it is that conducting international trade in a single currency is more systemically stable. Iow, the currency's ubiquity and total amount buffer shocks to the system, in a way that multi-polar currency use could not tolerate. If some folks decide to break {insert smaller international currency here} because they think it's overvalued and they don't use it, they probably have the means. But it's difficult to tip over a world-economy sized apple cart. And a single trade currency also mostly keeps nation-states out of the currency warfare game, because it's a gun pointed back at their head too.
  - GTP 4y ago
    This is what I meant by saying that it makes commerce easier.
zizee 4y ago
> Though I don't really understand why governments need a single currency. "need" is probably too strong a word. A single currency just makes things easier. Having a single currency, or using many different currencies is sort of like the difference between a barter system vs a money system (multiple currencies is equivalent to bartering). If the buyer is trying to buy in a currency that is not desired by the seller (i.e. there is nothing that they want being sold in that currency), the seller has to offload it somehow to someone that does want it. There is a cost to that, in additional risk and effort. Bartering works ok, up until a point. But a shared currency just removes friction, so is preferable.

zamnos 4y ago

The problem is it doesn't. It does balance out if you're a big wealthy nation with imports and exports. If you're a small poor nation with limited resources, money only ever flows out, and barely ever in, depleting the nation's treasury.

throwawaylinux 4y ago
If they are instead buying things with US dollars, where do those dollars come from?
- stephen_g 4y ago
  Often things like IMF loans that massively burden countries with debt to first world countries - with the money mostly going into infrastructure for extractive industries like mining so the countries who indebted them can buy their resources cheap, and also get to suck extra money out of their economy for the interest payments. These kind of things often just happen to end up that the people of a nation end up with the burden of the debt, austerity, etc. while a smaller group of well connected people and companies end up with the benefits.
  - pas 4y ago
    US trade balance is negative for decades, exactly because dollars go to developing countries (in the form of direct investment and also as the classic paying for things, and also because tourists leaving hard cash at the locals) IMF loans are better than austerity. and structural reforms as conditions of IMF loans are better than selling natural resource extraction rights for 99 years to private companies. are these development programs perfect? of course not, but the mindless and ignorant vilification is just propaganda at this point.
    - chii 4y ago
      These vilification are propaganda, likely covert operations from places like china or russia. The IMF is no saint, but they at least is looking to improve things, despite not acting altruistically. Their loans are contingent on economic reforms - e.g., Pakistan's default is in part due to state subsidies and inefficient tax allocation, etc. In the short term, reforming these things looks like causing of suffering for the population, but so does alcohol/drug withdrawal. In the long term, it produces a better economic outcome imho. Contrast this with stuff like the Belt and Road initiative.
      - throwawaylinux 4y ago
        > These vilification are propaganda, likely covert operations from places like china or russia. Source? > The IMF is no saint, but they at least is looking to improve things, despite not acting altruistically. Should I consider you likely covert operation from China or Russia because of the accusation that IMF is no saint and does not act altruistically?
      - my_city 4y ago
        [dead]

raverbashing 4y ago

> issue with dollar as international trade currency is that all transactions are performed via US banks Not necessarily. The US dollar is fully convertible and several countries offer accounts in USD (though a lot of places rely happily on SWIFT)

renonce 4y ago
Non US banks have to deposit their dollars to a US bank that actually handles transactions and decides if a transaction can go on or not.
- sgjohnson 4y ago
  This is not true. Eurodollars exist.
- skissane 4y ago
  There’s nothing stopping a non-US bank having a vault full of actual US currency backing its US-denominated accounts. And settling transactions by sending physical cash on a plane. It is more expensive than using a US bank which makes it much more electronic, but has the advantage that the US government cannot stop it except by shooting down that plane

GTP 4y ago

>Though I don't really understand why governments need a single currency. Just use your own currency and exchange other currencies, it'll settle down eventually. Because commerce is much easier if everyone uses the same currency, plus the more countries use a currency the more stable the currency gets. This where two big reasons why in EU most countries decided to use Euro.

atlantic 4y ago
It's not that commerce is easier: currency exchange is pretty frictionless nowadays. It's that the value of inputs and outputs, which are critical to running a company doing part of its business abroad, or buing inputs from abroad, is much easier to calculate without having to account for exchange rate fluctuations.
- ethbr0 4y ago
  I'd put it is that conducting international trade in a single currency is more systemically stable. Iow, the currency's ubiquity and total amount buffer shocks to the system, in a way that multi-polar currency use could not tolerate. If some folks decide to break {insert smaller international currency here} because they think it's overvalued and they don't use it, they probably have the means. But it's difficult to tip over a world-economy sized apple cart. And a single trade currency also mostly keeps nation-states out of the currency warfare game, because it's a gun pointed back at their head too.
- GTP 4y ago
  This is what I meant by saying that it makes commerce easier.

zizee 4y ago

> Though I don't really understand why governments need a single currency. "need" is probably too strong a word. A single currency just makes things easier. Having a single currency, or using many different currencies is sort of like the difference between a barter system vs a money system (multiple currencies is equivalent to bartering). If the buyer is trying to buy in a currency that is not desired by the seller (i.e. there is nothing that they want being sold in that currency), the seller has to offload it somehow to someone that does want it. There is a cost to that, in additional risk and effort. Bartering works ok, up until a point. But a shared currency just removes friction, so is preferable.