The nine-nation alliance of emerging economies has shifted away from the US dollar
President-elect Donald Trump has threatened to slap a 100 percent tariff on the economies of BRICS nations if they try to abandon the U.S. dollar as the chief international reserve currency, prompting speculation among economic observers.
“The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is over,” Trump wrote in a Nov. 30 Truth Social post.
BRICS—a nine-nation alliance of Brazil, China, Egypt, Ethiopia, India, Iran, Russia, South Africa, and the United Arab Emirates—has been at the forefront of the de-dollarization initiative in recent years.
The global campaign to shift away from the greenback generated significant momentum following Moscow’s invasion of Ukraine.
Officials from these countries have been employing measures to reduce their reliance on the buck.
In addition to engaging in bilateral trade settled in local currencies, there has been years-long speculation that the bloc would establish a new reserve currency to rival the dollar.
If the BRICS nations followed through on using a basket of currencies—tossing the ruble, yuan, rupee, and real into a big bowl and creating one uniform currency—it would not affect the dollar, economist Peter St Onge said.
Internal BRICS trade accounts for a little more than 1 percent of global trade, and the group’s share of worldwide reserves is approximately 5 percent.
By comparison, according to data from the International Monetary Fund (IMF), the U.S. dollar still represents approximately 60 percent of foreign exchange reserves. The next closest is the euro, accounting for fewer than one-fifth of global reserves.
Additionally, the Banker for International Settlements’ 2022 Triennial Central Bank Survey showed that the U.S. dollar accounted for 88 percent of global transactions, a figure that has stayed about the same for the past two decades.
“A basket of basket cases does not stand a snowball chance of replacing the dollar, at least outside trade between BRICS countries, say, between China and Russia,” Onge said in a video posted to X in October.
By Andrew Moran
