Friday, December 29, 2023

Can BRICS countries replace the dollar?

 The BRICS nations (Brazil, Russia, India, China, and South Africa) have been exploring ways to reduce their reliance on the US dollar for over a decade. This has included discussions about creating a new currency, promoting the use of local currencies, and developing financial channels built upon BRICS local currencies

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In August 2023, the BRICS bloc expanded to include Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. During the summit, the topic of dedollarization was a significant point of discussion
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 However, the idea of a common BRICS currency has been described as a "non-starter" by some experts, noting the major differences between the economies of the BRICS nations
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The BRICS nations have made some progress in their efforts to reduce reliance on the US dollar. For instance, in 2010, the BRICS Interbank Cooperation Mechanism was launched to facilitate cross-border payments between BRICS banks in local currencies
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 More recently, the BRICS nations have been developing "BRICS Pay," a payment system for transactions among the BRICS nations
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However, the US dollar remains the most widely used reserve currency, followed by the euro, the yen, the pound, and the yuan
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 The potential impact of a new BRICS currency on the US dollar remains uncertain, with experts debating its potential to challenge the dollar's dominance
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In conclusion, while the BRICS nations are actively working towards reducing their reliance on the US dollar, the creation of a common BRICS currency that could replace the dollar seems unlikely in the near future. The efforts so far have been more focused on promoting the use of local currencies and developing alternative financial channels
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