Foreign Policy: Will the BRICS currency shake the dominance the US dollar?
Joseph W. Sullivan, senior advisor at the Lindsey Group and economist at the White House Council of Economic Advisers, during the administration of former US President Donald Trump, said that the BRICS currency could shake the dominance of the US dollar, and the moment of de-dollarization may have finally arrived.
Sullivan added in his interview with the Foreign Policy that last month, in New Delhi, Alexander Babakov, deputy speaker of the Russian State Duma, said that Russia is now leading the development of a new currency, which will be used for cross-border trade by the BRICS countries, Brazil, Russia, India, China and South Africa.
According to the official and the financial expert, these developments complicate the narrative that the era of the US dollar is stable.
The currency issued by the BRICS group will be different, according to the Foreign Policy.
“It would be like a new federation of rising discontent that now collectively surpasses the United States as global hegemon, plus the G-7 combined”.
According to Sullivan, foreign governments wanting to free themselves from dependence on the US dollar isn’t new at all.
But the talk has yet to turn into results, and by one measure, the US dollar is now used in 84.3% of cross-border trade – compared to just 4.5% for the Chinese yuan.
Based on the economy at least, the prospects for the success of the currency issued by the BRICS are contained, according to Force Policy, and although many practical questions remain unanswered, such a currency could expel the US dollar as a reserve currency for the members of the BRICS, and shake the position of the US dollar.
Likewise, the official and the financial expert believed that this matter could be achieved through several scenarios, and if the BRICS used the currency for international trade only, it would remove an obstacle that now frustrates their efforts to escape from the dominance of the US dollar.
These efforts now often take the form of bilateral agreements to name trade in non-dollar currencies, such as the yuan, which is now the main currency for trade between China and Russia.
In the context, Alexander Losev, general manager of Sputnik Capital Management, announced that the US dollar may lose its dominance in the global currency market by the end of the decade, as happened after World War II with the British sterling pound.
Gold prices also rose in early Asian trading on Tuesday, supported by the decline in the US dollar, while investors await US economic data this week, to predict the next Federal Reserve move, regarding the interest rate.