During a gathering in Johannesburg, South Africa, representatives from developing and emerging economies within the BRICS group engaged in another week of expressing strong criticisms against the dominance of the US dollar.
Chief Olusegun, the former President of Nigeria, raised a thought-provoking question about the necessity of the dollar as the primary international reserve currency and the key medium for global trade.
He sparked applause from the attendees when he stated, as reported by Bloomberg, “When I want to make a purchase from India, why am I obligated to use dollars?” Nigeria heavily relies on revenue from crude oil exports, traditionally earning most of its dollars through these sales. However, the nation has recently encountered foreign exchange scarcity due to escalating imports, a challenge that has raised concerns within the country.
Opinions of other leaders
But it was not only the former Nigerian leader who voiced his discontent with the greenback, leaders from Brazil and Russia promoted calls for a move away from the USD and advocated for a new medium of international trade. Russia’s Vladimir Putin said in a recorded speech “The objective, irreversible process of de-dollarization of our economic ties is gaining momentum”
He went further saying the BRICS group would work to achieve the aspirations of the majority of the world’s population.
- He said “We cooperate on the principles of equality, partnership support, and respect for each other’s interests, and this is the essence of the future-oriented strategic course of our association, a course that meets the aspirations of the main part of the world community, the so-called global majority”
Brazil’s Lula Da Silva called for an alternative currency for international trade that doesn’t jeopardize national currencies. He said,
- “I have defended the idea of adopting a reference unit of account for trade, which will not replace our national currencies”
Why anti-dollar rhetoric is getting louder
Experts opined that the revitalized advocacy for a move away from the US dollar was necessitated by the sanctions by the United States government against Russia. Some of the sanctions include freezing Russia’s central bank assets and banning Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the international financial communication system, in February 2022. Hence there is a fear among nations that if they fall out with the West, the fate of Russia will befall them.
Long walk away from the dollar
However, creating an equitable alternative currency for international trade is not an easy task as there are many contentious questions with no easy answers.
- Last month, the Chief financial officer of the New Development Bank (NDB)- a financial institution created by the BRICS group said “The development of anything alternative is more a medium to long term ambition. There is no suggestion right now to create a BRICS currency,”
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