BRICS nations are advancing at a fast pace to eliminate the U.S. dollar-dominated financial system. The first step is to bypass the U.S. dollar and the second step is to create a new currency to settle international trades. While the first step is already in practice, the second step could be put in place after the BRICS summit in August 2023.
The alliance countries have already taken measures to bypass the US-dominated global financial system. The aim is to move away from the dependency on the U.S. dollar and provide an alternative global financial option. BRICS is an alliance of Brazil, Russia, India, China, and South Africa.
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BRICS: The Next Step To Eliminate The U.S. dollar
Just recently, BRICS nations overtook G7 countries in global GDP while taking purchasing power parity into account. Russia announced that it would pay with the Chinese Yuan to settle trade with Asian, African, and Latin American countries. China and France completed the LNG gas trade using Yuan, ending the dollar’s reliance on energy trades.
Therefore, BRICS are currently successful in their plans to eliminate the U.S. dollar to settle global trades in native currencies. However, if the alliance countries agree to a mutual currency to settle global trade in the upcoming summit in August, the dollar may face a significant drop in demand.
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The U.S. dollar might lack potency if the BRICS countries fully eliminate it for global settlements. Over time, many other countries could join the bandwagon and distance themselves from the USD.
The development could make the dollar weak and make way for a new financial system not dependent on the USD. The success or failure of this development now only depends on the next BRICS summit in South Africa.
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“The transition to settlements in national currencies is the first step. The next one is to provide the circulation of digital or any other form of a fundamentally new currency in the near future,” said the Deputy Chairman of Russia Duma, Alexander Bobakov.