IMF Foresees No ‘Rapid Shift’ in US Dollar Reserves Despite Rising De-Dollarization Trend

The International Monetary Fund (IMF) doesn’t anticipate a “rapid shift” within the U.S. greenback reserves regardless of a rising de-dollarization pattern and a looming U.S. debt default. “Don’t kiss your dollars goodbye just yet,” stated IMF Managing Director Kristalina Georgieva. The IMF chief doesn’t anticipate the U.S. to default on its debt obligations.

US Dollar’s Reserve Currency Status Not at Risk, According to IMF

The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, expressed her confidence Wednesday on the Qatar Economic Forum in Doha, organized by Bloomberg, that the U.S. greenback will preserve its world’s reserve forex standing.

Georgieva defined that regardless of rising de-dollarization discussions by varied international locations to lower their dependence on the USD:

We don’t anticipate a speedy shift in (greenback) reserves as a result of the rationale the greenback is a reserve forex is due to the energy of the U.S. economic system and the depth of its capital markets … Don’t kiss your {dollars} goodbye simply but.

A rising variety of international locations are ramping up their de-dollarization efforts. The BRICS financial bloc is pushing for using nationwide currencies, as a substitute of the USD, and is discussing making a common currency that can assist member nations scale back reliance on the US greenback. The BRICS contains Brazil, Russia, India, China, and South Africa.

The proposal of a standard forex is anticipated to be mentioned by the BRICS leaders at their upcoming summit. In addition, 10 Southeast Asian countries, members of ASEAN, additionally not too long ago agreed to encourage using nationwide currencies. This week, nine Asian countries mentioned de-dollarization measures in Tehran.

US Default Unlikely, Says IMF Chief

Commenting on the U.S. debt disaster, the IMF managing director stated she is assured the United States would keep away from a default.

U.S. Treasury Secretary Janet Yellen has warned repeatedly that the Treasury might not be capable of pay all the authorities’s payments as early as June 1 “if Congress does not raise or suspend the debt limit before that time.” The Congressional Budget Office (CBO) equally predicted {that a} U.S. default might happen within the first two weeks of June. Meanwhile, international funding financial institution Goldman Sachs stated that the “real deadline” for a U.S. default is extra like June 8-9.

Georgieva opined:

History tells us that the U.S. would wrestle with this notion of default … however come the eleventh hour it will get resolved and I’ve confidence we’ll see that play once more.

The IMF, nonetheless, not too long ago warned of “very serious repercussions” on each the American and international economies if the U.S. defaults on its debt obligations.

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