1/14/2024 0 Comments Hypertech tuner resetThe most ambitious path would be something akin to the Euro, the single-currency adopted by 11 member states of the European Union in 1999. Currency ambitionsĪlthough talk of a BRICS currency has gained momentum, there is limited information on various models under consideration. Yet a former White House economist sees a way that a BRICS currency could end dollar dominance. Treasury Secretary Janet Yellen believes the dollar will remain dominant as most countries have no alternative. The appeal of de-dollarization and a possible BRICS currency would be to mitigate such problems. Together with other BRICS countries, China has also criticized the use of sanctions as a geopolitical weapon. The Chinese government has also clearly laid out its concerns with the dollar’s dominance, labeling it “the main source of instability and uncertainty in the world economy.” Beijing directly blamed the Fed’s interest rate hike for causing turmoil in the international financial market and substantial depreciation of other currencies. He has reenergized the group’s commitment to de-dollarization and spoken about creating a new Euro-like currency. Lula is a longtime proponent of BRICS who previously sought to reduce Brazil’s dependence on and vulnerability to the dollar. Meanwhile, the 2022 election in Brazil reinstated Luiz Inácio Lula da Silva as president. And the West froze Russia’s US$330 billion in reserves last year. Because of sanctions, Russian banks have been unable to use SWIFT, the global messaging system that enables bank transactions. Russian officials have been championing de-dollarization to ease the pain from sanctions. And central banks have sought to shift more of their currency reserves away from the dollar and into gold.Īll the BRICS nations have been critical of the dollar’s dominance for different reasons. Iraq, Saudi Arabia and the United Arab Emirates are actively exploring dollar alternatives. Over the past year, Russia, China and Brazil have turned to greater use of non-dollar currencies in their cross-border transactions. The BRICS countries have been pursuing a wide range of initiatives to decrease their dependence on the dollar. dollar for international trade and finance – has been accelerating following the Russian invasion of Ukraine. Yet de-dollarization – or reducing an economy’s reliance on the U.S. dollars, and the dollar accounting for 58% of global foreign exchange reserves, the dollar’s global dominance is indisputable. With 88% of international transactions conducted in U.S. But what currency discussions do show is that the BRICS countries are seeking to discover and develop new ideas about how to shake up international affairs and effectively coordinate policies around these ideas. That all said, a new BRICS currency faces major hurdles before becoming a reality. have raised concerns among other countries about their dollar-denominated debt and the demise of the dollar should the world’s leading economy ever default. Meanwhile, rising interest rates and the recent debt-ceiling crisis in the U.S. And while the BRICS countries have been seeking to reduce their reliance on the dollar for over a decade, Western sanctions on Russia after its invasion of Ukraine have accelerated the process. The BRICS summit comes as countries across the world are confronting a changing geopolitical landscape that is challenging the traditional dominance of the West. Among the items on the agenda is the creation of a new joint BRICS currency.Īs a scholar who has studied the BRICS countries for over a decade, I can certainly see why talk of a BRICS currency is, well, gaining currency.
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