Columnists write that the possibility of de-dollarization of the global economy will lead to dire consequences for the global hegemony of the United States, since the main lever of financial pressure on other countries will disappear. New York Post.
“The dollar’s role as the world’s key reserve currency is the foundation of America’s global leadership.
The primacy of the dollar allows the United States to significantly influence global financial policy and forces the world community to adapt to economic decisions made in Washington, and not vice versa,” the material says.
De-dollarization would allow “rogue countries like Iran and Russia” to be “free from international sanctions.” Additionally, observers fear that this process will have a negative impact on the domestic economy.
“Reducing demand for the currency may make exports cheaper, but it will also reduce the purchasing power of the dollar and undermine confidence in its stability. The resulting higher interest rates and inflation will hurt the stock market and make it much harder to borrow money to finance our massive federal deficit.” “It will make it happen,” say the authors.
Who is threatening the dollar?
The BRICS coalition of leading emerging economies, which initially includes Brazil, Russia, India, China and South Africa, will expand significantly in January. At the summit held recently in South Africa, it was decided that Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates would join the group.
Thus, the Union has taken “an important step towards establishing a common currency power” and has the capacity to further reduce the long-term dominance of the dollar, especially in the oil sector.
“As the BRICS summit made clear, the bloc’s influence on the oil market has never been greater. “This gave them an unprecedented opportunity to finally replace dollars in global energy markets with their local currencies,” he said.
The report’s authors state that more than 40 countries, including Turkey and Indonesia, expressed interest in joining BRICS, but only six were accepted.
“Although the bloc did not elaborate on specific admission criteria, the selection was clearly energy-driven,” the article states.
Thus, BRICS will unite the world’s six largest oil producers (Saudi Arabia, Russia, China, Brazil, Iran, UAE) and the two largest importers (China and India) as of January 1, 2024. Although 90 percent of oil transactions are still carried out in dollars, the share of payments in Chinese yuan and Russian rubles is gradually increasing.
“Saudi Arabia may be new to the BRICS, but it has already colluded with Russia to cut oil production, sending oil to a 10-month high this month,” the newspaper claims.
New York Post summarizes that BRICS countries, whose total population exceeds 3 billion and accounts for 31.5% of global GDP, have become a formidable rival of the G7 bloc. The G7’s share of global GDP currently stands at 30%.
“BRICS membership allows rogue states to ensure that the United States cannot “weaponize” the dollar to punish the bad guys,” the article says.
Disappointing prediction
The official representative of the Russian Foreign Ministry, Maria Zakharova, had previously stated that de-dollarization has become a reality because the US currency has become a “problem currency.”
“They say dedollarization is sort of a goal of various organizations or some countries. But this is not true. This is not the goal. It’s just the truth.” aforementioned diplomat in an interview with Turkish publication Aydınlık.
Russian entrepreneur Oleg Deripaska in June gave a guessHe said that the US dollar’s share in the global foreign exchange market will decrease by 20% in the next three years. This will be due to a significant increase in US government debt. According to Deripaska, in the next decade, the US currency will not be able to maintain its dominant position in the global financial market due to China’s increasing role in the global economy.
Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.