De-dollarisation: ‘If BRICS uses own currency for trade, it will end dollar's hegemony,’ warns ex-White House economist

The US seems to be worried about dollar losing its dominance as the global reserve currency.

Amid the clamouring call for de-dollarization, former White House economist Joseph Sullivan has warned that if BRICS nations use the group’s own currency for international trade, it will put the dollar’s hegemony at risk.

Discussing de-dollarization and the potential impacts of a BRICS currency on the dollar, Sullivan in an opinion piece published by Foreign Policy said: “If the BRICS used only the bric for international trade, they would remove an impediment that now thwarts their efforts to escape dollar hegemony.”

BRICS currency could dislodge dollar

Sullivan, the White House Council of Economic Advisers during the Trump administration, said: “… a BRICS-issued currency’s prospects for success are new…. such a currency really could dislodge the US dollar as the reserve currency of BRICS members.”

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“Unlike competitors proposed in the past, like a digital yuan, this hypothetical currency (that BRICS nations are planning to introduce) actually has the potential to usurp, or at least shake, the dollar’s place on the throne,” he added.

Self-sufficiency for BRICS in international trade

Sullivan went on to say that the BRICS — Brazil, Russia, India, China and South Africa — would also be “poised to achieve a level of self-sufficiency in international trade that has eluded the world’s other currency unions.”

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He went on to explain that a BRICS currency union would likely help the members to be able to produce a wider range of goods than any existing monetary union. Also, it would not be restricted to only those countries united by shared territorial borders.

BRICS currency

The BRICS nations have been mulling creating a new currency to facilitate overseas trade. The idea was mooted by Russia as it faces economic sanctions from the West over its invasion of Ukraine.

It is expected that the new financial agreement could be seen as early as in August when the member nations meet in South Africa for their annual summit.

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Meanwhile, some of the BRICS countries have already ditched dollar and are now trading in their local currencies.

Brazil and China signed an agreement last month to abandon the dollar as an intermediary and settle bi-lateral trade in their own currencies.

As many as 18 countries have agreed to trade with India in Indian rupees. Earlier this month, Bangladesh also had finalised settling overseas trade with neighbouring India in INR.

Russia and China have been carrying out their bi-lateral trade in yuan, while Moscow has been settling trade for most of the goods with India in INR.

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