A total of 44 countries are ready to join the BRICS alliance and accept the new currency for cross-border transactions. Developing countries from Asia, Africa, South America, and Europe have expressed interest to join the BRICS bloc months before the summit. A handful of Gulf countries are among the nations that are interested to accept the BRICS currency for global trade. The Gulf countries are oil-rich and export billions of barrels of oil to the U.S. and Europe every year.
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The Gulf countries currently settle remittances with the U.S. dollar but it may begin to accept the BRICS currency after its formation. The U.S. dollar faces a risk of losing its demand if the soon-to-be-released BRICS currency gets accepted for oil transactions. In this article, we will highlight the risks the U.S. dollar face if the Gulf countries accept BRICS currency.
BRICS: What Happens if Gulf Countries Accept the New Currency?
Saudi Arabia, Bahrain, and the United Arab Emirates (UAE) are the top exporters of oil in the Gulf region. The three countries export billions of barrels around the world and accept the U.S. dollar for remittance. If the trio joins BRICS and forces the West to settle trade in BRICS currency, the U.S. dollar will find no means to fund its deficit.
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If Gulf countries trade in BRICS currency, it would signal a shift from the traditional financial markets. The move could pave the way for a new world order dominated by the East and not the West. The developing Eastern countries will experience an increase in their geopolitical influence giving them more power in the world’s economic forums. The existing geopolitical system will be disrupted and the financial order will see a drastic paradigm shift.
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If Western allies, especially Europe, settle trade in BRICS currency, the U.S. dollar will experience a reduction in demand. If the greenback loses demand in the global markets, the American economy will be the hardest hit. Read here to know how many sectors in the U.S. will take a hit due to the BRICS currency.