(RepublicanNews.org) – The American dollar’s status as the World Reserve Currency is under threat from the BRICS nations (Brazil, Russia, India, China, and South Africa). Their leaders plan to meet in Cape Town in August to decide if they will move forward with the creation of a novel currency.
The five-nation trade alliance was created in June of 2019 and has discussed creating a gold-backed challenger to the petrodollar since its founding.
Brazil, Russia, India, China, and South Africa are the only current members, but eight other nations have formally applied for membership. Among them is the oil powerhouse of Saudi Arabia. Over twenty countries have either voiced an interest in joining the alliance or in trading in their future currency.
In 1971, President Nixon severed the U.S. dollar’s connection to gold, but it was able to maintain its worldwide dominance as the medium through which oil was traded between nations.
BRICS nations and those interested in joining reportedly anticipate an inflated dollar with less purchasing power. In June 2020, the American Treasury printed more currency than had been issued during the first 200 years of the nation. Many economists foresee significant inflation on the horizon and some predict a scenario of hyperinflation.
Former Treasury Secretary Larry Summers conveyed that in addition to the dollar being seen as unstable, its use in the form of aid comes with political qualifiers from the U.S. government. He says developing countries prefer taking aid from countries like China because it doesn’t come with “a lecture” about social policies.
The BRICS summit in August will follow the July 20th rollout of the Federal Reserve’s FedNow system. The program will allow for on-demand digitized instant payments between U.S. banking institutions and customers.
Critics have said the move will further centralize the dollar and that it lays the infrastructure for a future CBDC. Under such a system, the government would be able to control and monitor all transactions in real time.
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