BRICS expanding from five countries to a new set of blocs will be a serve blow to the U.S. dollar. The USD is currently the world’s reserve currency and its status is being challenged by the alliance. BRICS and other developing Eastern countries are looking to promote their native currencies and sideline the dollar for global trade.
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The Indian Foreign Service diplomat and Deputy Secretary Gaurav Gupta hinted that BRICS could soon expand to BRICS+ in August. He said to Outlook India that the alliance is framing new steps to end reliance on the U.S. dollar. He signaled that the U.S. dominating the world’s financial order could soon come to an end with the launch of the new currency.
BRICS: New Currency Could Destabilize the U.S. Dollar
Gupta said that the BRICS alliance will increase international cooperation with developing countries after the launch of the new currency. The global financial sector will see increased involvement in cross-border transactions in the soon-to-be-released currency. This could lead to an excess in trade, investment opportunities, and development without the U.S. dollar’s presence.
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Once the currency gains grip in the global sector, the U.S. dollar’s demand will gradually begin to decrease. The U.S. will struggle to fund its deficit leading to the USD on the path of a decline. America will no longer use its financial power to press sanctions on other nations and cripple their economy.
“Overall, the expansion of BRICS and the launch of a new currency could have a number of positive benefits. These benefits include reduced dependence on the U.S. dollar, increased trade and investment, and reduced political pressure from the U.S.,” he said.
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BRICS is an acronym for Brazil, Russia, India, China, and South Africa. The next summit will be held in South Africa and the formation of a new currency will be jointly decided.