BRICS has been a prominent player in the vision of reshaping the global economic landscape. Its members, including China, Russia, Brazil, South Africa, and India, have all come together to express their interest in achieving a new monetary system that does not implicate risks to their economies.
In a recent report by Jim O’Neill, the economist who came up with the BRICS acronym predicted the future developments that might see the bloc’s vision of dethroning the US Dollar come true. The BRICS group has been in the public eye for its efforts to challenge the supremacy of the USD as a dominant currency.
O’Neill’s view on BRICS and the US Dollar
O’Neill specifically discussed in detail the expansion of an opinion piece. He confirmed the determined efforts of the group on international resilience and assured one vital factor that could be done in combating it at once.
BRICS has been fully committed to its de-dollarization efforts for much of the year. This has been seen as the bloc expands its dealings on conducting international trades in local currencies. However, according to O’Neill, these efforts might occur abundantly and might be misguided.
Jim O’Neill first coined the BRICS phrase two decades ago and did this to place a spotlight on the emerging economies in the global financial sector. He highlighted its purpose on how it could be a tool that serves beyond symbolism for currency independence.
Recently, he disclosed a further dive into the bloc’s purpose as well as giving his insights on its potential growth, which might be overwhelming.
During his announcement on mentioning the insights on the BRICS invented goal, O’Neill laid down the frameworks and keys to dethroning USD dominance in the global financial market. He broke down the economic reality the bloc possesses and the implications of various moves in realizing its vision.
BRICS’s influence on the global monetary system
Considering the opinion piece, among the biggest issues the bloc faces is the USD dominance. He said, “It’s not especially healthy for the world to be so dependent on the dollar.” He further divided into how the bloc missed the Euro opportunity that could add to the UDS dethroning efforts if member countries had allowed its global appeal. He adds that:
The introduction of the euro could have diminished the dollar’s dominance if eurozone member states had agreed to allow their financial instruments to be liquid and large enough to appeal to the rest of the world. Similarly, if any of the BRICS – especially China and India – undertook significant financial reforms to achieve that goal, their currencies would almost certainly become more widely used.Jim O’Neill
O’Neill highlighted the need for the bloc to reform its financial approach in order to achieve de-dollarization. He added, “If they continue to limit themselves to complaining about the dollar and musing in the abstract about a shared BRICS currency, they are unlikely to achieve much.”
In another report, Russia, a member of BRICS, recently recorded China’s Yuan dominance in its trade deals. This promoted confidence in the bloc’s efforts. However, there is still a discussion on the currency to be used by all BRICS members, and this has caused misunderstandings.
One such incident is the Indian state refusing to make payments in Yuan and prefer the US Dollar. India initially planned to pay Russia to produce oil and was expected to pay using the Chinese Yuan. The country is now refusing to pay for the resources in Yuan and favors the USD. According to Bloomberg, an executive from the state-run Indian Oil Company (IOC) commented that five cargoes have been delayed as India holds on to the Yuan payments.