The BRICS economic alliance, consisting of Brazil, Russia, India, China, and South Africa, is intensifying its efforts to reduce reliance on the US dollar and establish a multipolar world. The alliance is focusing on the oil industry and increasing investments in gold, with China leading the way as the biggest investor in gold among the BRICS nations. The goal is to create a new global reserve super currency outside of the US dollar, which could potentially lead to hyperinflation and job cuts in the US economy if successful. [953ef739] [299d752e] [7bcbccc7]
Russian President Vladimir Putin's recent announcement during the 12th BRICS Summit further solidifies the alliance's commitment to reducing dependence on the US dollar. Putin stated that the BRICS countries are developing an independent payment system that is free from political pressure and based on principles of openness, equality, and mutual respect. This system aims to challenge the dominance of Western currencies and create a more decentralized and neutral financial landscape. [56a0c873]
In addition to their de-dollarization efforts, the BRICS countries are exploring the use of blockchain technology for their newly devised payment system. By embracing digital assets and blockchain, the alliance aims to create a competing currency that can challenge the dominance of the US dollar. This shift towards digital assets and blockchain technology opens up new possibilities, with Bitcoin potentially benefiting as a more neutral and decentralized alternative to traditional currencies. As countries move away from using the US dollar for bilateral trade, the use of Bitcoin may increase, particularly in regions where local currencies are susceptible to political manipulation. [969c1c11] [53e9eb9a] [299d752e]
India and Nigeria, both members of BRICS, have recently agreed to trade in their local currencies instead of the US dollar. This move not only strengthens the bilateral trade relations between the two countries but also contributes to the broader de-dollarization goal of the BRICS alliance. Nigeria has also expressed interest in joining BRICS, further expanding the alliance and its de-dollarization efforts. [91f41245] [969c1c11] [299d752e]
Despite the covert efforts by the United States to undermine the BRICS alliance, the coalition continues to strengthen its trade relations and de-dollarization initiatives. In the first quarter of this year, bilateral trade between Russia and India, two BRICS members, reached a record high of $17.5 billion. This growth in trade not only solidifies the BRICS alliance but also reinforces its efforts to reshape the global financial landscape. Additionally, the alliance is actively working on developing its own native currency, further challenging the dominance of the US dollar. [91f41245] [299d752e]
The dominance of the US dollar in cross-border transactions has been declining, from 80% in 2010 to 50% in 2023, according to the IMF. The BRICS alliance's efforts towards de-dollarization, including the development of a gold-backed cryptocurrency, could further erode the US dollar's dominance. The IMF has even warned about the potential collapse of the US dollar triggered by the de-dollarization strategies of the BRICS nations. Despite this, the US dollar remains the de facto currency for global trade and commerce. However, as the BRICS alliance captures a larger share of the oil sector and settles trade in local currencies, the dominance of the US dollar could continue to decline. The BRICS alliance aims to create an independent payment system based on digital technologies and blockchain, signaling a potential shift in the global financial landscape. [7bcbccc7] [91f41245] [299d752e]
Wall Street analyst Linda Jones suggests that Ripple could serve a role similar to the Federal Reserve in the anticipated new financial system. Jones argues that the BRICS coalition opposes the Federal Reserve's control of the global economy via the US dollar and advocates for a shift to a truth-based system backed by real assets. She highlights Ripple's transparency, accountability, and the XRP Ledger as factors that make it suitable for this new system. Jones believes that Ripple could be seen as the new Federal Reserve, but unlike the current Federal Reserve, Ripple is privately owned and will be publicly traded in the future. She also notes that Ripple's position would enable America to maintain its leadership role and expresses confidence that the US dollar will not lose its value completely before the transition occurs. The analyst sees a parallel system emerging where various financial systems operate on the XRP Ledger. [e3be051b]
According to an analysis by F.M. Shakil, the US dollar could experience a decline if the BRICS assume control of the energy industry and begin trading in their respective currencies, according to the IMF. The Moscow Stock Exchange halted trading in dollars and euros after the US Treasury Department imposed additional sanctions on Russia. The US petrodollar contract with Saudi Arabia has expired, allowing Riyadh to sell oil in various currencies. Putin announced that BRICS is developing an independent payment system unaffected by political pressure and external sanctions. The BRICS countries have been increasing their gold reserves, which support the common payment system. JPMorgan predicts a crisis that could impact the dominance of the US dollar. China has been diversifying its assets, reducing exposure to US Treasury assets and increasing purchases of gold. Congress passed a bill giving the US administration authority to seize Russian assets held by American banks. [d35e6bf9]
BRICS is an intergovernmental organization established in 2006 comprising Brazil, Russia, India, China, and South Africa. It was set up as an alternative bloc to the Western-led order and has gained relevance in the shifting geopolitical order. Malaysia has announced its intention to join BRICS to enhance trade and strengthen its middle powership. However, a comprehensive cost-benefit analysis and consideration of future power parity must be conducted. BRICS has internal divisions and challenges in rivaling the dollar-led trade and financial system. The New Development Bank (NDB) has had limited success in project finance. BRICS is primarily an economic and financial pact that aims to reduce the West's grip and avoid the risks of the dollar trap. However, it risks backfiring and complicating efforts to address global challenges. The future strength and reach of BRICS depend on addressing internal barriers and reforming the conventional system. [de538d1f]
The BRICS alliance is planning to launch a gold-backed currency to challenge the U.S. dollar, with the announcement expected at the October 2024 summit. The goal is to create a multipolar financial world where developing countries have limited reliance on the dollar. Global trade will be settled in the new currency or local currencies of developing countries, reducing the risk of hoarding dollars. The banking and finance sector in the U.S. will be the most affected, with banks needing to take measures to protect the dollar. The forex market may see new currency pairs, adding pressure on the dollar. The supply and demand mechanism for dollars may be disrupted, impacting the lending activities of U.S. banks. The financial sector, including consumer goods, retail, technology, and fintech, will also be impacted. Inflation may rise, affecting everyday prices in the U.S. The de-dollarization initiatives by BRICS will have adverse effects on the U.S. economy and daily life in America. [10eafb23]
Wall Street Analyst Linda Jones suggests that Ripple could play a similar role to the Federal Reserve in the emerging financial system. Jones believes that the BRICS coalition is against central banks and the dominance of a single currency, particularly the US Dollar. She advocates for a transition to a financial system supported by real assets and emphasizes the need for transparency. Jones sees Ripple, with its XRPL Ledger blockchain, as a front-runner in this new system. She highlights the importance of accountability and notes that Ripple could be seen as the new Federal Reserve. However, she clarifies that Ripple is privately owned and will be publicly traded in the future. Jones believes that America can retain its leadership role through Ripple and envisions a parallel system where various financial systems operate on the XRP Ledger. [e3be051b] [ca7ca3a9]