Three Ways BRICS Currency Threatens the U.S. Dollar

The BRICS alliance is on a mission to bring the U.S. dollar down and make local currencies reign supreme. Developing countries are looking to cut ties with the USD and strengthen their native economies by putting local currencies ahead. The paradigm shift in geopolitics is concerning as the East to looking to topple the West in the financial sector.

The East wants to break free from the clutches of the U.S. dollar as their economies are being affected by the mounting $34.4 trillion debt. Moreover, a recession in the U.S. will directly impact their economies as the major part of their reserves consists of the USD. Therefore, BRICS is convincing other countries to end reliance on the U.S. dollar and embrace local currencies for cross-border transactions.

BRICS Currency: 3 Ways the U.S. Dollar Will Be Affected

BRICS is also looking to launch a new currency in the markets and settle trade among themselves with it. The development is in its initial steps and has a long way to go in the formation of the currency. However, one thing is certain, the BRICS currency is aimed at targeting the U.S. dollar to uproot it as the world’s reserve currency.

If a BRICS currency is launched, the U.S. dollar could face challenges in three different directions. The U.S. dollar could be affected in the ways mentioned below:

1. The ‘supply and demand’ for the U.S. dollar could be reduced on the international stage

2. The U.S. dollar’s position as the world’s reserve currency could begin to weaken

3. Local currencies could strengthen and challenge the U.S. dollar in the currency markets

Also, all these three developments could occur within two years if the BRICS alliance launches its own currency. Read here to know how many sectors in the U.S. will be impacted if BRICS ditches the dollar for trade.

This article originally appeared on Watcher.Guru