Latest news with #ManuelFreire-GarabalyNúñez
Time of India
a day ago
- Business
- Time of India
Rethinking monetary defenses: Why policymakers must reframe de-dollarization strategies
H.E. Prof. Sir Manuel Freire-Garabal y Núñez is a lawyer and journalist. He is a professor, contributor and advisor at different universities, particularly at the IVY League. He serves in diplomacy as advisor to United Nations higher officials and as a member of the diplomatic staff of several governments. He has received high honours from Russian Federation, United States or Peru. LESS ... MORE Global finance is entering a transitional phase. The US dollar remains pre-eminent, yet governments are quietly building buffers against its risks. Economist Otaviano Canuto has described this as 'slow and bounded de-dollarization'—a phrase that captures not only the limits of the trend but also the opportunities it creates for smart policymaking. The challenge now is not to predict the dollar's demise, but to reframe existing policies so that they adapt to this cautious diversification. Beyond symbolism: Policy adaptation Much of the discussion around de-dollarization has been dominated by political rhetoric. But Canuto's insight is clear: local-currency arrangements and regional payment systems are not about toppling the dollar, they are about risk management. Governments must treat them as tools of resilience, not as ideological projects. That reframing matters. Instead of seeing initiatives like the Brazil–China settlement mechanism or BRICS payment platforms as threats to global stability, policymakers should recognize them as insurance policies against shocks. A coherent policy approach requires aligning these experiments with broader financial safety nets. India's opportunity to lead India illustrates the policy crossroads. With foreign reserves above $650 billion, it already possesses one of the world's strongest first-line defenses. At the same time, the Reserve Bank of India has promoted rupee-denominated settlements with partners such as Russia, Sri Lanka, and Mauritius. These moves reflect the logic Canuto highlights: pragmatic steps to diversify, not disrupt. The policy implication is twofold: Deepen liquidity in rupee instruments, so that settlement agreements can expand beyond symbolic volumes. Tie rupee internationalization to regional safety nets, ensuring that bilateral arrangements complement, rather than fragment, existing monetary defenses. By anchoring its strategy in this way, India could become a model for other emerging economies navigating the same balance. Rebuilding the three pillars Canuto's framework for external financial defense provides a roadmap for policy reform: Reserves remain necessary but costly. Policymakers must debate not only how much to accumulate but how to deploy them strategically—through sovereign wealth vehicles, diversification into non-traditional assets, and conditional swap access. Swap lines and regional arrangements should be reframed as policy infrastructure, not ad-hoc crisis tools. India's role in the BRICS Contingent Reserve Arrangement could be scaled up as part of this shift. The IMF must be strengthened, not sidelined. For India and other G20 economies, advocating a larger quota share and modernized lending instruments is not charity—it is self-interest in ensuring that the multilateral backstop keeps pace with global liabilities. Toward a reframed policy architecture The central lesson is that de-dollarization is not an alternative to the existing system but a layering of complementary protections. Policymakers who continue to frame it as a contest of supremacy will miss the real point: the task is to build resilience in a world of uncertainty. Reframing existing policies along the lines Canuto outlines means: Treating local-currency initiatives as hedges, not revolutions. Embedding swap arrangements in long-term architecture. Pushing for a stronger IMF to serve as the connective tissue between regional and global defenses. Conclusion The future of global finance will not be determined by grand announcements but by how governments adapt their policies today. Canuto's expertise reminds us that the real danger is not dollar dominance, but policy inertia. For India and other emerging economies, reframing their monetary strategies now—before the next crisis—may determine whether de-dollarization becomes a source of stability or a pathway to fragmentation. Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.
Time of India
21-04-2025
- Business
- Time of India
The economic strategy of Trump
H.E. Prof. Sir Manuel Freire-Garabal y Núñez is a lawyer and journalist. He is a professor, contributor and advisor at different universities, particularly at the IVY League. He serves in diplomacy as advisor to United Nations higher officials and as a member of the diplomatic staff of several governments. He has received high honours from Russian Federation, United States or Peru. LESS ... MORE The economic strategy of Trump, along with cooperation between the Federal Reserve and cryptocurrencies, could prolong America's status as the top currency nation. The financial system of the world has reached an essential decision point. The rising debt amounts worldwide and central bank liquidity restrictions, alongside digital assets becoming more popular, have seriously weakened trust in traditional money systems. The economic approach of US President Donald Trump through pro-growth reforms and trade rebalancing and cryptocurrency openness presents the United States with strategic opportunities both for national recovery and continued dominance of the U.S. dollar as a global reserve currency. Real GDP averaged 2.5% growth annually during Trump's government from 2017 to 2020, after preceding years achieved 2.2,% while unemployment hit its lowest point at 3.5% in February 2020. The Tax Cuts and Jobs Act brought corporate tax reform that reduced the federal corporate income tax rate from 35% to 21%, as a result of which companies invested capital while repatriating their overseas fund, which amounted to over $1 trillion between 2018 and 2020. The pro-growth policies promoted consumer spending and industrial output which generated increased demand that exceeded U.S. national boundaries. During the past two years, global GDP increased at an average annual rate of 3.6% and 3.8% because of the American government's spending policies. Trade tensions received criticism, but the effort to create fair trade agreements resulted in better intellectual property protection and more diverse supply chain networks, which enhanced global long-term stability. The current progress is facing serious threats. The Federal Reserve continues to maintain its benchmark interest rate between 5.25%–5.50% because it aims to control inflation, which persisted after the pandemic. The Federal Reserve holds rates above 5.25% to 5.50% currently, while headline inflation dropped to 2.3%, but businesses experience weak wage growth and decreased consumer demand, leading to small business lending becoming as restrictive as it was in 2008. The current high interest rate, as part of the disinflationary environment, creates the risk of shutting down real economic activity and dismantling supply-side benefits from earlier reforms. The fiat system faces lasting questions about its sustainability because of the present economic downturn. Since 1945, the US dollar has remained a leader in international trade, yet growing financial deficits amounting to over $1.8 trillion per year, alongside a national debt higher than $34 trillion, raise doubts about financial stability. China and Russia, together with other nation, commit efforts toward eliminating the United States dollar from trade activities and institutions like the BRICS bloc explore different reserve currencies. Digital assets emerge to resolve some of the challenges because they are not threats themselves. The XRP ledger from Ripple, together with other US-derived blockchain payment solutions, provides users access to immediate settlement platforms that present both complete oversight and affordable international payment capabilities. XRP operates in more than 70 international countries for B2B transactions and remittance services, while Ripple currently works with big banking institutions and central banks to test CBDC bridge systems. Trump advocates the advancement of American crypto innovation under regulations that would boost American leadership in blockchain development. The current administration displays a broken and confrontational approach towards regulations, which stands in complete opposition to the support shown under the previous administration. The SEC's lawsuit against Ripple Labs alongside Coinbase and other companies has generated market uncertainty, which forced innovation to relocate abroad, thereby reducing America's blockchain leadership in the financial revolution. The U.S. gains an enhanced dollar utility by developing supportive regulations for responsible crypto innovations, including Ripple's platform, because they choose to operate within existing regulations. Similar assets including XRP together with dollar-backed stablecoins, may act as settlement components both in institutional and central banking networks worldwide. Trump's economic beliefs, which promote economic growth through innovation and strategic nationalism, create an organised methodology to protect both US economic power and dollar sustainability. To achieve this vision, both the Federal Reserve need to adopt more accommodative monetary policies for actual economic growth and Washington must approve digital asset infrastructure which behaves adjacent to the existing banking infrastructure. The world is moving quickly. The United States will forfeit its dollar supremacy because of inaction rather than economic breakdowns. The United States can emerge as a leader of future global finance through coordinated efforts between fiscal policy with monetary adaptation and digital system development and Donald Trump may provide the necessary framework for success. Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.
