Following the landmark BRICS expansion, more countries are looking to opt out of using the US dollar. As the BRICS bloc grows and the message of de-dollarization spreads, some are worried about BRICS as a long-term threat to the US dollar.
The greenback has been the main source of currency for all global transactions for nearly a century. Things are slowly beginning to change after the BRICS bloc decided to bring the US dollar down early this year. The addition of oil-producing countries like Saudi Arabia, the UAE, Egypt, Iran, and Ethiopia also means that the BRICS take a large share of the oil and gas markets. These were once dominated by the US dollar, but now maybe that can change.
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However, most experts agree that any significant threat to the ever-dominant US Dollar would take a long time to develop and successfully overthrow it. On the other hand, despite it taking a long time, some do believe it can be possible. BNY Mellon Bank recently commented on the growth of BRICS. The Bank says that the US Dollar could fall if BRICS targets more technology and the rest of global reserves.
“The USD is unlikely to lose its global reserve status anytime soon,” the bank stated. “A new currency union should look to technology or green baskets, rather than gold-or carbon-based ones.”
Also Read: BRICS: BNY Mellon Outlines How the US Dollar Could be Beaten
To push for de-dollarization, countries are leaning towards trading in local currencies rather than the US dollar. Some countries, like Argentina, are also ditching the US Dollar for a completely different currency, like the Chinese Yuan. As more countries ditch the US dollar, global reliance on the greenback may see a challenge on a whole new level.
BRICS has made it clear that disinvesting in the US dollar is a long-term goal. Therefore, if they don’t bring the dollar down in this decade, they may in the next. The BRICS bloc is an impending threat to the US Dollar. It is just a matter of how long until that threat begins to settle in.