Despite being the de facto top-most used currency in the world for all trade and transactions, BRICS wants to abandon the US dollar. The reasons are deeply rooted in the foreign policies that stemmed from the White House corridors. Not just Trump, the angst has remained for two decades now, and developing countries want to override the US dollar with their local currency.
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Top 3 Reasons BRICS Wants To Ditch the US Dollar
The main and most important top 5 reasons why the BRICS alliance wants to ditch the US dollar are:
- Sanctions Being Imposed By the US
The US has been imposing sanctions on anyone it deems unfit and has targeted Iran, Iraq, and Palestine. The recent sanctions on BRICS member Russia backfired as it kick-started the global de-dollarization moment. Developing countries fear that the US can sanction anyone at any time; therefore, to protect their interest, they want to cut back on the US dollar and boost local currencies for trade.
2. Perception of Meddling in the US Monetary Policy
On Thursday, Trump teased he would fire US Treasury Secretary Scott Bessent if the Fed didn’t cut interest rates. Emerging economies have a perception that the US government is pressuring the Federal Reserve and meddling in its matters, bullying the independent entity on interest rate hikes. Also, the fallout between Trump and Fed Chair Jerome Powell was an open book for the world to see. Therefore, BRICS and other emerging economies have a perspective that the President, the US dollar, and the Federal Reserve are untrustworthy.
3. Mounting US Debt
BRICS wants to stay away from the dollar as the US debt has crossed $38 trillion. Since the US exports the dollar to fund its deficit, holding on to the dollar-denominated assets poses a risk to its economy. Diversifying from the USD to other assets like gold and local currencies helps them mitigate the risk. Emerging economies are worried that the US will fail to contain its debt.