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The dollar will not be 'dethroned', however, will lose a market share. From the speeches made at the BRICS summit, it looks like the plan is to create a settle
by hunglee2 3y ago
The dollar will not be 'dethroned', however, will lose a market share.
From the speeches made at the BRICS summit, it looks like the plan is to create a settlement currency for inter-BRIC country trades.
This was a probably long time coming. The 'exorbitant privilege' of one country being able to print currency every other country needs (or is forced to need) requires commensurate responsibility, including the wisdom not to use that privilege as an instrument of foreign policy. Unfortunately, the temptation to use the 'dollar weapon' has become too difficult for US Gov to resist and no one should not be surprised that other countries seek to reduce risk.
The US remains the No1 or No2 trade partner for almost every country in the world. so the USD will likely remain No1 currency, but it will lose a market share, a little at first, then maybe a lot
- raincom 3y agoOther countries bear the cost of US printing dollars to the infinite; that's why inflation in other countries is double/tripe of the official inflation rate (aka natural interest rate) in US. 35% of dollar value comes from being the reserve currency of the world: Saudi wants dollars for their oil sold to China/India; China/India wants dollars for the stuff they sell to Saudi. Just get rid of dollar in these transactions.
- nradov 3y agoBRICS aren't actually going to create a new settlement currency for international trade. The interests of the major members aren't aligned. It's all talk. I guarantee that in 20 years no significant volume of trade will be settled that way.
- simonblack 3y agoGold is not the only commodity that can be exchanged as 'currency'. Some people will use oil, others might use steel, titanium, etc. Before the dollar, there were other ways of international payments. They haven't been used for years, but they could be used again. The US's economic sanctions and reserve confiscations are the biggest killer for the Dollar. Without the sanctions, the Dollar would probably have been used indefinitely without major problems. The definitive shot to the Dollar's head was the confiscation of Russia's international reserves. If it can happen to Russia today, it could happen to anybody else tomorrow. That makes countries insecure about their wealth. Just like a working man knowing he's possibly going to get fired any time now.
- nradov 3y agoCome on, be serious. No country is going to carry out a significant volume of international trade by bartering metals. If that is done at all it will be token amounts for propaganda purposes. Despite what might have happened centuries ago there's just no practical way to do that at scale. If some countries can't use USD for trade settlement then they'll use one of the other major fiat reserve currencies (and not this total joke of a BRICS currency).