How BRICS Is Coming Together To Challenge the US Dollar | Vantage with Palki Sharma
The Downfall of the Dollar and the Emergence of BRICS
This section discusses the emergence of BRICS (Brazil, Russia, India, China, and South Africa) as a challenge to the US dollar's dominance in global trade. Russia has floated the idea of a common currency for BRICS countries and is pushing for a new global reserve currency.
BRICS Countries Challenge US Dollar Dominance
- BRICS represents 41% of the world's population, 24% of the world's GDP, and more than 16% of the world's trade.
- Russia has floated the idea of a common currency for BRICS countries to challenge the US dollar's dominance in global trade.
- Reports say that they are working on a proposal which is likely to be taken up in August at the BRICS summit in South Africa.
- Russia is under Western sanctions and its access to the global banking system has been limited. It cannot use the US dollar freely so it is pushing for a new Global Reserve currency.
The Way Forward: National Currencies and Digital Currency
- Alexander Babakov, Deputy Chairman of Russian State Duma suggests that transition to settlements in national currencies is first step towards providing circulation of digital or any other form of fundamentally new currency.
- Settlement of trade in national currencies between India and Russia has led to boost bilateral trade valued at $30 billion dollars.
Hopes from India and China
- Russia hopes for wider support from India as President Putin unveils his new foreign policy guidelines.
- China wants Yuan to replace U.S dollar but would it agree to a brics currency? India wants economic integration with China but given the challenges at the border, these conflicting priorities are the biggest roadblocks before BRICS today.
Conclusion
The US dollar's dominance is under threat as BRICS countries challenge it by floating the idea of a common currency. Russia is pushing for a new global reserve currency and hopes for wider support from India and China. However, conflicting priorities between India and China pose a challenge to this idea.