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China and Russia are the driving force behind the BRICS alliance that aims to topple the U.S. dollar’s global supremacy. India remains on the sidelines and is skeptical of For several years, the BRICS have sought to reduce their dependence on the US dollar through the development of a monetary alternative. However, at the beginning of A proposed BRICS common currency pegged to a basket of BRICS-member currencies or gold has captured the imagination, but experts remain sceptical. Gustavo de Brazil’s President has called for the creation of a common currency for trade and investment between BRICS nations to reduce vulnerability to dollar exchange rate The long-term monetary goals of the BRICS bloc comprising Brazil, Russia, India, China, and South Africa, with new members such as Egypt, Iran, Ethiopia, and the UAE Given the recent expansion of the “BRICs” countries to include five new members, will the US dollar remain the world’s reserve currency? Franklin Templeton

BRICS Ambition: Can They Dethrone the US Dollar's Long-Term Supremacy?

The long-term monetary goals of the BRICS bloc comprising Brazil, Russia, India, China, and South Africa, with new members such as Egypt, Iran, Ethiopia, and the UAE, are generating considerable debate. Given the recent expansion of the “BRICs” countries to include five new members, will the US dollar remain the world’s reserve currency?

For several years, the BRICS have sought to reduce their dependence on the US dollar through the development of a monetary alternative. China and Russia are the driving force behind the BRICS alliance that aims to topple the U.S. dollar’s global supremacy. India remains on the sidelines and is skeptical of this ambitious goal.

The Allure of a BRICS Common Currency

Brazil’s President has called for the creation of a common currency for trade and investment between BRICS nations to reduce vulnerability to dollar exchange rate fluctuations. A proposed BRICS common currency pegged to a basket of BRICS-member currencies or gold has captured the imagination, but experts remain sceptical. Gustavo de Oliveira, an expert at Franklin Templeton, notes the challenges in creating and managing such a currency, considering the diverse economic landscapes and political priorities of the member nations.

Challenges to Dollar Dominance

While a BRICS currency presents a compelling vision for diminishing the US dollar's power, significant hurdles remain. The economic disparities between BRICS nations, the complexities of establishing a stable exchange rate mechanism, and the need for strong political cooperation all pose considerable challenges. The influence of individual members like China and Russia also raises concerns about equitable governance within the bloc's financial framework.

The Path Ahead: Incremental Steps and Regional Initiatives

Dethroning the US dollar is a monumental task, unlikely to be achieved overnight. A more realistic approach for the BRICS might involve incremental steps, such as promoting the use of their own currencies in bilateral trade agreements and establishing regional payment systems that bypass the dollar. These initiatives can gradually reduce reliance on the US dollar, but a complete overthrow of its global dominance remains a distant prospect. The BRICS nations will continue to explore ways to strengthen their economic and financial independence, even if a common currency remains a long-term aspiration rather than an immediate reality.

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