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De-Dollarization: Countries Seeking Alternatives to the U.S. Dollar

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De-Dollarization: More Countries Seek Alternatives to the U.S. Dollar

De-Dollarization: Countries Seeking Alternatives to U.S. Dollar

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The U.S. dollar has dominated global trade and capital flows over many decades.

However, many nations are looking for alternatives to the greenback to reduce their dependence on the United States.

This graphic catalogs the rise of the U.S. dollar as the dominant international reserve currency, and the recent efforts by various nations to de-dollarize and reduce their dependence on the U.S. financial system.

The Dollar Dominance

The United States became, almost overnight, the leading financial power after World War I. The country entered the war only in 1917 and emerged far stronger than its European counterparts.

As a result, the dollar began to displace the pound sterling as the international reserve currency and the U.S. also became a significant recipient of wartime gold inflows.

The dollar then gained a greater role in 1944, when 44 countries signed the Bretton Woods Agreement, creating a collective international currency exchange regime pegged to the U.S. dollar which was, in turn, pegged to the price of gold.

By the late 1960s, European and Japanese exports became more competitive with U.S. exports. There was a large supply of dollars around the world, making it difficult to back dollars with gold. President Nixon ceased the direct convertibility of U.S. dollars to gold in 1971. This ended both the gold standard and the limit on the amount of currency that could be printed.

Although it has remained the international reserve currency, the U.S. dollar has increasingly lost its purchasing power since then.

Russia and China’s Steps Towards De-Dollarization

Concerned about America’s dominance over the global financial system and the country’s ability to ‘weaponize’ it, other nations have been testing alternatives to reduce the dollar’s hegemony.

As the United States and other Western nations imposed economic sanctions against Russia in response to its invasion of Ukraine, Moscow and the Chinese government have been teaming up to reduce reliance on the dollar and to establish cooperation between their financial systems.

Since the invasion in 2022, the ruble-yuan trade has increased eighty-fold. Russia and Iran are also working together to launch a cryptocurrency backed by gold, according to Russian news agency Vedmosti.

In addition, central banks (especially Russia’s and China’s) have bought gold at the fastest pace since 1967 as countries move to diversify their reserves away from the dollar.

How Other Countries are Reducing Dollar Dependence

De-dollarization it’s a theme in other parts of the world:

  • In recent months, Brazil and Argentina have discussed the creation of a common currency for the two largest economies in South America.
  • In a conference in Singapore in January, multiple former Southeast Asian officials spoke about de-dollarization efforts underway.
  • The UAE and India are in talks to use rupees to trade non-oil commodities in a shift away from the dollar, according to Reuters.
  • For the first time in 48 years, Saudi Arabia said that the oil-rich nation is open to trading in currencies besides the U.S. dollar.

Despite these movements, few expect to see the end of the dollar’s global sovereign status anytime soon. Currently, central banks still hold about 60% of their foreign exchange reserves in dollars.

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Money

Mapped: The Income Needed to Live Comfortably in Every U.S. State

A single adult needs to make at least $116k annually to live comfortably in Massachusetts.

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This map illustrates the income necessary for an individual to maintain a comfortable lifestyle in each state.

The Income Needed to Live Comfortably in Every U.S. State

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Individuals in the top 11 most expensive states in the U.S. need an annual income exceeding $100,000 to live comfortably.

This map shows how much income single adults need to live comfortably in each U.S. state. SmartAsset calculated the income needed using the cost of necessities sourced from the MIT Living Wage Calculator, last updated on Feb. 14, 2024.

In this case, “comfortable” was defined as the annual income required to cover a 50/30/20 budget, allocating 50% of earnings to necessities such as housing and utility costs, 30% to discretionary spending, and 20% to savings or investments.

Massachusetts Ranks First

Massachusetts is the most expensive state to live comfortably in. A single adult needs to make at least $116,022 annually or $55.78 per hour.

RankStateSalary needed for a single working adult
1Massachusetts$116,022
2Hawaii$113,693
3California$113,651
4New York$111,738
5Washington$106,496
6Colorado$103,293
7New Jersey$103,002
8Maryland$102,918
9Oregon$101,088
10Rhode Island$100,838
11Connecticut$100,381
12Virginia$99,965
13New Hampshire$98,093
14Arizona$97,344
15Georgia$96,886
16Alaska$96,762
17Vermont$95,763
18Illinois$95,098
19Delaware$94,141
20Utah$93,683
21Nevada$93,434
22Florida$93,309
23Maine$91,686
24Pennsylvania$91,312
25North Carolina$89,690
26Minnesota$89,232
27Idaho$88,733
28South Carolina$88,317
29Wyoming$87,651
30Texas$87,027
31Tennessee$86,403
32Indiana$85,030
33Montana$84,739
34Kansas$84,656
35Michigan$84,365
36Wisconsin$84,115
37Missouri$84,032
38Alabama$83,824
39Nebraska$83,699
40New Mexico$83,616
41Iowa$83,366
42Mississippi$82,742
43Louisiana$82,451
44South Dakota$81,453
45Ohio$80,704
45Kentucky$80,704
47North Dakota$80,538
48Oklahoma$80,413
49Arkansas$79,456
50West Virginia$78,790

West Virginia is the least expensive for a single adult, who only needs to make an estimated $37.88 per hour, or $78,790 annually.

To live comfortably on your own in the top five states, a person would need to earn nearly double the typical income for single earners, as the U.S. median income for single, full-time workers is around $60,000, according to Labor Bureau data.

If you enjoyed this post, be sure to check out this graphic, which ranks the income a family needs to live comfortably in every U.S. state.

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