A series of events unfolded recently challenging the supremacy of the U.S. dollar in the global marketplace. Firstly, BRICS countries announced their intention to work together on creating a new currency to settle trade. Secondly, China and France completed their first LNG gas trade using the Chinese Yuan, ending reliance on the U.S. dollar for energy settlements.
Thirdly, Russia and India abandoned Europe-dominated oil prices, agreeing to use the Dubai oil price benchmark instead. In addition, Saudi Arabia’s Crown Prince Mohammed Bin Salman said that he is no longer interested in “pleasing” the United States. You can read more details about his comments here.
Also Read: Will the U.S. Dollar Collapse Now That BRICS Are Developing Their Own Currency?
Now that China and Russia are forging ahead at full speed to strip the U.S. dollar of its supremacy, will they succeed? The answer to that lies much deeper in geo-political roots than economics.
Will China & Russia Strip The U.S Dollar’s Supremacy?
U.S. President Joe Biden is doing little to nothing in stopping China and Russia from stripping the U.S. Dollar from power. This gives room for both countries to pull off this move that they’ve been craving for decades. Therefore, Biden’s failure in accessing the situation is what led to this day, where both China’s Xi Jinping and Russia’s Vladimir Putin are trying their hand to sideline the Dollar.
Coming back to the question about ‘will China and Russia succeed in replacing the US Dollar’, well, they might not. Both China and Russia might not succeed in tarnishing the Dollar as both countries are seen as anti-democratic nations. China is a communist state, whereas Russia is a federal republic state, and if anything goes wrong, their people can’t elect a new leader to undo the wrongdoings. Therefore, any misstep trying to replace the Dollar with a new currency or their own currency may backfire.
Also Read: US House Speaker Says President Biden is Putting the Economy in Jeopardy
China, Russia & The BRICS Issue
In addition, BRICS nations trying to create their currency is not as easy as expected. India and China remain at loggerheads and have more bitter political disputes than unity. The contention between the two nations will only make things worse politically than sitting at the table to solve issues.
Also Read: President Xi Jinping Says He is Preparing China for War
While China and Russia might pull off a few trade deals, they might last forever. Technically, the U.S. dollar is backed as the default global reserve currency with billions worth of trades being executed each day. The Dollar has a special global status and is considered one of the safest currencies. The United States is still the biggest economy in the world with an annual GDP of around $23 trillion.
China and Russia might succeed in replacing the U.S. Dollar only if their leaders stop being rouge. In conclusion, not a lot of countries would favor trading with rouge leaders as per their terms in the long run.