Amid their ongoing de-dollarization efforts, the BRICS alliance has recently discussed a plan that could be catastrophic for the US dollar. The grouping has spent much of the last two years embracing expansion and decreasing international reliance on the greenback. One initiative could be a key aspect of the latter.
The collective had begun development on its payment system earlier this year. Although information is scarce, Iran has expressed interest in connecting all member central banks in the process. That would have a massive impact on global finance, but it isn’t the only step that could see the bloc do away with overreliance on the Western currency.
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BRICS Alliance Has a Plan That Could Greatly Hinder the US Dollar
In 2023, the BRICS expanded for the first time in more than two decades. That saw Iran, Egypt, Ethiopia, and the United Arab Emirates (UAE) become its newest members. It also sent an invitation to Saudi Arabia. Although they have not yet declined, they have been pondering their admission into the group.
Their inclusion could be a game-changer. The BRICS economic alliance has discussed one economic plan that could have a catastrophic impact on the US dollar. Specifically, Russia’s Vladimir Putin has suggested working with oil producers to eliminate the use of the greenback in unilateral trade.
“If oil producers in the Middle East stop using the dollar, it will be the end of the dollar,” Putin recently said. With Saudi Arabia joining, the BRICS bloc would have control of 42% of the world’s oil market. The implementation of such an initiative would completely change the market and the currency power balance.
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Nasdaq recently reported that 100% of all oil trades were settled in the dollar until 2023. From then, one-fifth of all such trades were in other currencies. Those statistics should continue to shift on their current trajectory. Russia made several huge trade deals with alliance nations. That should secure the use of their native currencies, while further declining the greenback figures.
If that were to expand to Saudi Arabia, there is no telling the impact that would have. The dollar is secure as a global reserve asset and has shown perseverance amid a struggling US economy. But that is certainly up in the air now. With geopolitical uncertainty, the BRICS bloc could take the chance to introduce a massive shift. Both through their payment system and oil settlement currencies.