USD To Lose Reserve Currency Status. Who are the BRICS Countries?

“Change is coming that hasn’t happened in 100 years and we are driving this change together,” Xi, President of China said while firmly grasping Putin’s hand. “I agree,” Putin replied while giving Xi’s an arm squeeze. “Please take care, dear friend,”

“The enemy to my enemy is my friend.” While Russian leaders and Putin have a war on their plate, at least they know China hates NATO just as much as the next country. They have been cooking this for a while but seeing the writing on the wall of the declining USD, and after getting thrown pretty much all Western Banking systems such as the SWIFT settlement system, Russia had to pivot to protect themselves.

That is why you see the big dogs of the BRICS counties, Russia and China have been teaming up to reduce reliance on the United States Dollar.

BRICS is an acronym that refers to five major emerging national economies: Brazil, Russia, India, China, and South Africa. The grouping was originally known as “BRIC” before South Africa joined in 2010. 

These countries are characterized by their large, fast-growing economies and significant influence on regional and global affairs. Collectively, the BRICS countries represent a substantial share of the world’s population and economic output.

Here’s a brief overview of each country:

  1. Brazil: The largest country in South America. Brazil has a diverse economy with vast natural resources and a strong agricultural sector. It is one of the world’s leading producers of commodities such as soybeans, coffee, and sugar.

  2. Russia: Russia is the largest country by land area and has an abundance of natural resources, particularly in energy (oil and natural gas). Its economy is heavily dependent on the export of these resources, making it susceptible to fluctuations in global commodity prices.

  3. India: India is the second-most populous country in the world and has one of the fastest-growing major economies. It has a diverse economy with strengths in information technology, pharmaceuticals, and manufacturing, as well as a large agricultural sector.

  4. China: China is the most populous country in the world and has the second-largest economy by nominal GDP. Over the past few decades, China has experienced rapid economic growth, driven by industrialization, urbanization, and its role as the world’s factory for manufacturing goods.

  5. South Africa: South Africa is the most industrialized country in Africa, with an economy built on the extraction and processing of natural resources. It is a major producer of precious metals like gold and platinum and has a well-developed financial and telecommunications sector.

The BRICS countries have established a cooperative platform to strengthen their economic, political, and cultural ties, as well as to increase their collective influence in international forums. Basically leading the way to accelerate the decline the United States Dollar as the Global Reserve Currency. A status the United States pretty much took the top global power economically post World War II. 

BRICS operates as a cooperative platform where all five countries participate as “equal partners”. Decision-making within BRICS generally follows the principle of consensus, with member countries working together on various economic, political, and social issues. Kind of like, “If it makes money it makes sense mindset.” 

BRICS countries do not have a formal secretariat or headquarters, but they maintain close communication and cooperation through annual summits, ministerial meetings, and working groups in different areas of mutual interest. The annual BRICS Summit rotates among the member countries, with the host country assuming the presidency for that particular year. The host country is responsible for organizing the summit, setting the agenda, and coordinating activities among the BRICS countries during its presidency.

While China is the largest economy among the BRICS countries and plays a significant role in the group, all five countries contribute to the decision-making process and work together to promote their shared interests and strengthen their economic ties. Part of strengthening their economic ties includes the demise of the United States. 

What does it mean if other countries stop using the US Dollar to trade?

If other countries stop using the US Dollar (USD) to trade, it signifies a decrease in the demand for the USD and a potential decline in its status as the world’s primary reserve currency. This could have several consequences for the United States and the global economy:

  1. Loss of reserve currency status

    We are on our way people. The USD has been the dominant global reserve currency since the Bretton Woods Agreement in 1944. A significant reduction in the use of the USD in international trade could lead to a decline in its status as the primary reserve currency, with other currencies like the Euro, Chinese Yuan, or a basket of currencies potentially taking its place.

  2. Reduced demand for USD: A decline in the use of the USD in international trade would reduce the demand for the currency, potentially leading to depreciation. This could make US exports more competitive but also increase the cost of imports, leading to higher inflation.

  3. Weaker influence on global financial markets: The US enjoys significant influence over international financial markets due to the prevalence of the USD. Losing its reserve currency status could limit the US’s ability to impose economic sanctions or influence global economic policies.

  4. Higher borrowing costs: The demand for US Treasury securities, considered safe-haven assets, might decrease if the USD loses its reserve currency status. This could lead to higher interest rates on US government debt, increasing borrowing costs and potentially affecting fiscal stability.

  5. Potential economic instability: A sudden shift away from the USD could lead to volatility in currency markets and create economic instability. It could disrupt international trade, foreign investment, and financial markets, leading to negative consequences for both the US and the global economy.

It’s important to note that the process of other countries stopping the use of the USD in trade would likely be gradual rather than sudden. This would allow for adjustments and adaptations by market participants, mitigating some of the potential negative consequences.

As these deals continue to develop you will definitely see more checkpoints in this economic shift. As the West continues their attempt to destabilize and weaken Russia, if they find their way to victory they may be way better off than before in terms of territorial expansion, technological advancement, and more influence across the globe in many facets. This will likely will result in a rise in Russian Nationalism and citizen morale as a victory in war can bolster national pride and confidence, which might translate to economic growth and political stability.

A troubling view from the perspective of someone from the other side of the world. Only time will tell.


Leave A Comment

Your email address will not be published. Required fields are marked *