Communist China’s dream of seeing the greenback lose its place as the globe-dominating currency is gaining force as a growing number of countries switch allegiance to the yuan while moving away from king dollar. 

“Serious issue,” Twitter’s owner, Elon Musk, tweeted on Wednesday. “US policy has been too heavy-handed, making countries want to ditch the dollar. Combined with excess government spending, which forces other countries to absorb a significant part of our inflation.”

Latin America’s largest economy, Brazil, announced a deal with Beijing this week to ditch the dollar and conduct trade in yuan and real. Brasilia’s leftist president, Lula da Silva, was due at Beijing this week, but stayed at home to battle a bout with pneumonia.

Bilateral trade between Brazil and China is worth more than $150 billion annually, and the Asian behemoth is already Brazil’s largest trading country. Their new deal would cut costs and “promote even greater bilateral trade,” Mr. da Silva’s government said in a statement. 

Russia has long been part of Chairman Xi’s campaign to end the dollar’s status as the lingua franca of global trade. Moscow has adopted the yuan — a domination Beijing officially calls the “people currency,” or renminbi — as its main currency for international reserves, overseas trade, and even some personal banking services, as it pivots toward China in the face of Western sanctions, the Financial Times reports.

“China’s changing policies may require us to develop new defensive tools for some critical sectors,” the European Commission president, Ursula von der Leyen, said in a speech Thursday. She is due at Beijing next week, as is the French president, Emmanuel Macron.

The European tough talk aside, this week a Beijing-owned oil company, CNOOC, and France’s TotalEnergies completed an agreement for a liquefied natural gas trade through the Shanghai Petroleum and Natural Gas Exchange. Deals involving up to 65,000 tons of LNG will be settled, for the first time, in yuan. 

Also this week, Riyadh deepened its relation with Beijing as the Saudi oil arm, Amarco, acquired interests in two Chinese refineries for $3.6 billion. China is the kingdom’s largest energy client, and talks between the countries have progressed toward accepting oil contracts in yuan, reversing the greenback’s decades-old dominance in oil deals. 

As yet, there is “no immediate threat” to the greenback’s global dominance, a senior fellow at Independent Institute, Judy Shelton, says. “In 2000, the dollar made up 70 percent of the world foreign exchange reserves,” she tells the Sun. “This year it’s 59 percent.”

America sits over the world’s largest gold reserve, and the dollar is considered the most reliable denomination among the world’s largest economies. Since the pandemic, America has extended its agreements for dollar-based swap lines to 14 of the world’s top economies.

Yet, there are dangers on the horizon. As countries look for alternatives to the greenback, Beijing is working overtime to weaken its dominance, which has been in effect since the Bretton Woods system was established in the aftermath of World War II.     

“We’ve come to expect it from Russia, which has been trying to avoid using dollars for a long time,” Ms. Shelton says. Brazil has been contemplating the use of yuan and real since a while back as well, and France has “always resented” the dollar’s dominance. If Saudi Arabia is joining these countries, she warns, “that’s serious.”

Had her nomination for a Federal Reserve seat not been rejected by the Senate, Ms. Shelton says she would have urged board members to pay more attention to the king dollar’s global position. The Fed “is not taking sufficient consideration to it in its deliberation,” she adds.  

If the dollar were to be replaced as the world’s currency, global demand would fall along with demand for U.S. treasury securities, an economist at the American Institute for Economic Research, Pete Earle, tells the Sun. “That, in turn, would have far-reaching implications for how much debt America can incur,” he says.

“Interest rates would then rise,” making borrowing much more expensive, Mr. Earle says, “and there would undoubtedly be many other effects, some of which we can’t foresee. It would be a change of existential proportions.”

To avert this, America must “get our fiscal and monetary houses in order” and “decrease the debt level, focus on price stability, and live at least somewhat within our means,” he says.

Like other economists, Mr. Earle warns against reliance on sanctions against enemies, like Russia and Iran. America must “make clear that weaponizing the dollar against other nations is a thing of the past,” he says. 

It’s a question of costs and benefits, Mr. Shelton adds. Freezing Russian assets was “scary” for Vladimir Putin, she says. “It’s a financial war.” So if Washington decides to wage it, “we can’t do it lightly.”

Policy makers will have to weigh the benefits against the risks of imposing financial sanctions on enemies. Yet, pressures from the euro, future currencies, and, mostly, Beijing’s enmity, will keep threatening a global monarchy long ruled by king dollar.