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- BRICS Bank, also called New Development Bank (NDB) has launched a 3 years plan to completely move away from the US dollar.
- Many crypto enthusiasts are campaigning for the adoption of Bitcoin as a BRICS currency.
CNF has on multiple occasions covered the decision of the BRICS to switch from the US Dollar to a common currency for trade between member countries. According to the latest report, the BRICS bank called New Development Bank (NDB) has unveiled a 3-year de-dollarization initiative to switch away from the USD. As part of the plan, loans would be lent in local currencies to members. This is to reduce demand for the USD.
It is important to note that Iraq is the latest country to join the de-dollarization movement. NDB’s initiative also comes following the induction of UAE, Saudi Arabia, Egypt, Argentina, Iran, and Ethiopia into the movement.
According to the Iraqi Central Bank, people will not be allowed to withdraw money in dollars from January 1, 2024. People are equally banned from using the greenback in transactions.
For now, the NDB is exploring different ways to replace the USD with other currencies. Details would be provided to BRICS leaders. NDB would provide a means to boost the use of local currency while strengthening the economy of member countries. When this happens, currencies of developing countries would gain strength, and would not lose out on forex charges.
According to reports, there is a possibility that the global financial system will change massively by 2026. This implies that the East could seize financial power from the West while developing countries take control of their economy. It is important to note that BRICS are in charge of 30 percent of the global economy.
Also, the global oil of the BRICS Alliance is in a massive surge as Saudi Arabia, the UAE, Egypt, Iran, and Ethiopia export millions of barrels annually. For now, BRICS controls 40.9 percent of the world oil supply.
Impact of De-dollarization by BRICS
A complete shift from the USD could affect several areas of the US economy including Banking and Finance, Consumer Goods and Retail, Production and Consumption, Technology and Fintech, Global Financial System, Energy and Commodity Market, Travel and Tourism, Government and Policy, etc.
According to Meera Chandan, Co-Head of Global FX Strategy, J.P. Morgan, de-dollarization is already evident in FX Reserve.
The dollar’s transactional dominance remains top-of-class despite secular declines in U.S. trade shares. On the other hand, de-dollarization is evident in FX reserves, where the dollar’s share has declined to a record low of 58%.
Alexander Wise, Strategic Research, J.P. Morgan has also stated that the move away from the dollar is linked to geopolitical and geostrategic shifts.
The risk of de-dollarization, which is a periodically recurrent theme throughout post-war history, has returned into focus due to geopolitical and geostrategic shifts.
Several crypto enthusiasts are also campaigning for the BRICS to adopt Bitcoin due to its convenience, cheaper settlement fee, fast transaction, etc. When this happens, the Bitcoin price could record a new all-time high triggered by unimaginable demand and speculation.
As of press time, the asset was trading at $27,430.86. In the last 24 hours, Bitcoin has fallen by 0.38 percent.
