The BRICS alliance kick-started the de-dollarization initiative this year and is finding multiple alternatives to end the U.S. dollar supremacy. From BRICS expansion, to plans of creating a new currency, and dumping U.S. dollars in the foreign exchange market, the bloc is trying it all.
BRICS confirmed after the 15th summit in August that dethroning the U.S. dollar as the world’s reserve currency is their long-term goal. Therefore, even if they don’t succeed now, the alliance will relentlessly continue its quest of bringing the U.S. dollar down.
In this article, we will highlight three ways in which BRICS could end the U.S. dollar supremacy. Read here to know how many sectors in the U.S. will be affected if BRICS stops using the dollar for trade.
BRICS: 3 Ways How They Could Bring the U.S. Dollar Down
- Accepting Local Currencies For Oil and Gas Trade
BRICS inducting six new countries into the bloc is a strategic move to control the world’s oil and gas sector. The new countries Saudi Arabia, UAE, Egypt, Iran, and Ethiopia are oil-producing and exporting nations. Only Argentina does not produce oil but is allowing multinational corporations to use local currencies for trade due to scarcity. If BRICS succeeds in accepting local currencies for oil transactions, the USD could experience a knock-out effect in the markets.
- Convince Other Countries To Pay in Local Currencies For Transactions
After oil, BRICS could also convince developing countries to ditch the U.S. dollar and use local currencies for different payments. Several developing nations remain on the sidelines and are waiting to join the de-dollarization bandwagon to strengthen their native economies. If a handful of new countries shift to trading in local currencies, the USD will lose out in the global supply and demand dynamics.
- Further Strengthen Their GDP
BRICS GDP now constitutes $30.8 trillion in 2023 and their economies are growing at a rapid pace. While the G7 GDP stands at $45.9 trillion, they might close the gap in the next two or three decades. The development will put BRICS in the driver’s seat of the global financial sector and diminish America’s power and superiority. Read here for a full-depth and better understanding of the BRICS vs G7 GDP.