Brazil nixes BRICS currency, eyes less reliance on 'mighty' dollar
Brazil nixes BRICS currency, eyes less reliance on 'mighty' dollar
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24 comments
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I don't think a BRICS currency will be successful in replacing the dollar unless the governments of the participating countries force their businesses to use it. The reason why transactions are denominated and settled in US dollars is because of the perceived stability of its value and the openness of the US financial system to international trade. People use the US dollar because they trust the American government to not excessively devalue it and for it to be reliably useful later on.
And yes, I recognise that all of these are under attack by the current US government.
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I mean US sanctions will force companies to use it, if it ever becomes real. Think like Huawei wanting to sell stuff to Russia, but US threatens to kick any bank out of swift that trades with Russia. So then they would have this Brics-$ to circumvent that. That's the whole point. US is sanctioning so many countries that there is a need for alternative, not that USD/swift is bad system for those using it. USD needs replacing because it has become a Washington's geopolitical sledgehammer and a chokepoint to free flowing world trade. Even Putin said that only reason they have been reduing dollar usage, because they have been barred from using it, not because they are particularly eager to do it by itself.
Companies would want it because it would a one way to secure their profits and nation's would want it because it frees them from the unilateral sanction sledgehammer.
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The reason why transactions are denominated and settled in US dollars is because of the perceived stability of its value and the openness of the US financial system to international trade.
No, it's because the oil trade is conducted in dollars (the point of America's adventures in the middle east are ultimately to enforce this). This creates a demand for dollars, despite the US having the largest trade deficits in human history (which for any other country, would have made their currency worth less than the paper it was printed on).
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Changes are afoot.
- S&P Global: Saudi-China ties and renminbi-based oil trade
- Reuters: Vast China-Russia resources trade shifts to yuan from dollars in Ukraine fallout
Imports of Russian oil, piped gas, coal, metals mostly settled in yuan
- Atlantic Council: The axis of evasion: Behind China’s oil trade with Iran and Russia
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24 comments