BRICS and ASEAN blocs are ditching the US dollar for global trade by using local currencies to settle cross-border transactions. A total of 21 countries have officially agreed to end their reliance on the US dollar to promote and strengthen their native currencies. Both BRICS and ASEAN are challenging the U.S. dollar’s global reserve status by aiming to put local currencies at the forefront. Going by global development, BRICS and ASEAN pose a lesser threat compared to the growing debt crisis in the US.
US Dollar Debt a Major Problem, Not BRICS and ASEAN
The U.S. dollar’s dominance is facing a challenge not from the outside but from the inside. According to a recent CBO update, the US dollar deficit could snatch 181% of the American GDP over the next 30 years. A high debt was the cause of the downfall of the Pound sterling as a global currency in the 1900s.
Now compare this data to a prediction made by Bloomberg about the BRICS for the next 30 years. According to Bloomberg, the new 11-member BRICS bloc could dominate 50% of the world’s GDP by 2050. The BRICS currently control 30% of all global trade, and the majority of the deals could soon be settled in local currencies.
The BRICS also commands 46% of the global population, which is only rising while the population in the West is decreasing. In addition, the BRICS now control 42% of the global oil supply after the induction of Saudi Arabia and the UAE.
If the US dollar debt is controlled, the American economy and GDP could flourish in the next three decades. America would face no serious competition from the BRICS if the US dollar deficit was brought back on track. In conclusion, the ever-growing debt could be the last nail in the dollar’s coffin, not the BRICS alliance.