The U.S. dollar remains the de facto superior currency for global trade for nearly a century. The dollar reigns supreme in all financial institutions and businesses around the world having an edge over the other currencies. This puts the USD in a unique position and countries without the ‘dollar reserves’ tend to collapse. Therefore, all nations need the U.S. dollar to survive or end up facing the consequences of an economic disaster. Now, the BRICS alliance has come forward to put an end to the U.S. dominance in the international financial sector.
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BRICS is looking to challenge the U.S. dollar’s hegemony by launching a new currency in the international markets. Also, the new BRIC currency will be used for cross-border transactions by like-minded nations and end reliance on the U.S. dollar.
BRICS: ‘It’s Wrong For the U.S. Dollar to be Used Globally’, Says IMF Executive
Aleksei Mozhin, the Executive Director for Russia at the International Monetary Fund (IMF) says that the U.S. dollar must not be used for global transactions. The IMF executive said that it is wrong for other countries to trade in the U.S. dollar and not their local currencies. Mozhin called America’s motives selfish, which looks upon its own interest and not for the betterment of the world.
The statement comes at a time when the U.S. is facing a debt ceiling crisis. A debt default could affect not only the American economy but all countries that hold the U.S. dollar as reserves. Therefore, keeping the U.S. dollar as reserve could hurt local economies and businesses of other nations.
America is using the dollar “for the purposes of national interests” to fund its deficit from other countries, said Mozhin. “The economic and financial obligations of one country” should not be the burden of other nations, the IMF executive said.
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The IMF executive director called it “wrong” for the U.S. dollar to be used globally for cross-border transactions. He called for other countries to trade in their local currencies or find a bridge currency like the Chinese Yuan.
“More nations are ramping up the use of alternative currencies, particularly the Chinese yuan, in cross-border transactions,” he said. “It’s clear that it (de-dollarization) will not happen at once, but the process has begun,” the IMF executive summed it up.
The next BRICS summit will be held in August in South Africa. The BRICS bloc will decide on the formation of a new currency as an alternative tender to the U.S. dollar.