As the BRICS Alliance continues its mission of de-dollarization in 2024, some financial experts warn that this could lead to disaster for the bloc. One finance minister explains that de-dollarization could pose major risks for BRICS as well as developing countries.
Zimbabwe’s former Finance Minister Tendai Biti believes that since the US Dollar is the leading currency for major and developing countries, ditching it will do more harm than good. With Zimbabwe looking to join the bloc in 2024, Biti warned President Mnangagwa to not follow the BRICS path. Speaking on his country joining BRICS and following de-dollarization Biti states that the country could plunge into financial turmoil, leading to “disaster,” for both Zimbabwe and BRICS.
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“The regime is intent on de-dollarization. This move will be an absolute disaster and will cost workers and pensioners,” said Biti. Furthermore, he warns that “Conditions for de-dollarization don’t exist,” and local currencies dominating the world are a figment of imagination.
While BRICS leading nations could likely survive without the US Dollar and with local currencies, it’s difficult to say the same for developing nations. Zimbabwe, for example, is one of multiple financially struggling nations, especially concerning its local currency. While BRICS and the BRICS New Development Bank may provide hope to fix its issues, abandoning the US Dollar is too much of a risk, according to Biti.
How De-Dollarization Could Harm The Bloc
Furthermore, if developing nations join the bloc’s mission of de-dollarization, BRICS will have to accelerate its plans following the US Dollar’s demise. BRICS currency doesn’t appear to be ready yet, and if their mission succeeds too soon, it may be hard to get on the ground running without the US dollar as a safety net. The USD has been the far-and-away most used currency around the world for decades. Not only will it be difficult to overthrow it, but it would be difficult for global trade to survive without its backing.
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Until Zimbabwe could become more self-reliant, joining a bloc with the aspirations of the bloc may be too soon. Therefore, the country, as well as others in Africa, should be careful of full-sending BRICS or NDB applications, heeding Biti’s warnings.