The Bank Credit Analyst Research (BCA), which is Canada’s leading investment advisory firm, published a report on the future of the US dollar’s supremacy amid the onslaught of the BRICS de-dollarization agenda. The US dollar comes under intense pressure as the 11-member bloc is increasingly settling cross-border transactions in local currencies. The development is threatening the stability of the greenback as its role as the global reserve currency is being undermined.
BCA Research introduced a US “Dollar Dominance Indicator” to measure the value of the currency against BRICS and other monetary systems. The indicator tracks the greenback’s role in five different areas. The five areas include valuations from:
- FX reserves
- FX trading volumes
- Foreign-currency debt issuance
- International banking claims and liabilities
- Global payments and trade finance.
Also Read: 3 BRICS Powers Ditch $180B US Bonds, Hold 3,350+ Tons Of Gold Now
Will BRICS Bring Down the US Dollar Supremacy? BCA Report Sheds Light
The BCA Research pours cold water on the BRICS’ anti-US dollar plans. According to the recently published report, the greenback passes all five tests in the Dollar Dominance Indicator. This puts the currency in a safe spot despite facing severe challenges from the 11-member alliance.
BCA Research wrote that the “dollar’s dominance remains entrenched across global financial markets, payments and trade, underpinned by strong network effects that make diversification away from the US-centric system slow and difficult,” making it harder for BRICS to succeed in its quest to dethrone the currency. Taking the top spot in the currency market is much harder than thought.
Even as the US dollar’s appeal weakens, the BRICS de-dollarization agenda will fail to succeed, wrote BCA Research. “While countries adjust reserve allocations unilaterally, shifting transaction currencies in trade, banking, and capital markets requires coordination among many users, which limits the pace of change.” In conclusion, the US dollar‘s supremacy is forecasted to last much longer globally and not perish anytime soon.