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Why Are More Countries Abandoning the Dollar

The US dollar, the world's reserve currency, is extremely important to the world economy. However, due to worries about monetary safety and trade autonomy, there is a growing tendency towards the use of alternative currencies in international trade.

This trend is unmistakably demonstrated by the introduction of the BRICS currency. Brazil, Russia, India, China, and South Africa are the five developing nations that jointly created the BRICS currency. The goal of the currency is to lessen the reliance of poor nations on the US dollar by offering an alternative to the dollar in international trade.

At least 24 nations have also expressed interest in using and exchanging the BRICS currency, indicating that the proposal is gaining pace. The BRICS currency is significant because it has the potential to threaten the US dollar's hegemony in the international financial system.

The US has considerable financial sway thanks to the dollar's status as the world's reserve currency, which also enables it to maintain its influence over other nations' economies and politics by placing economic sanctions and trade restrictions. Russia’s war in Ukraine and the 2008 financial crisis showed that there are risks associated with this dominance.

Since the dollar is widely used in trade, several nations have sizeable sums of US debt. When the US experiences a recession, which has the potential to have severe effects on local currencies, this debt risk is increased. One of the factors influencing the demand for alternative currencies like the BRICS is the potential of a debt crisis, which is a major issue for nations that trade with the US.

Another factor for avoiding the use of US dollar, for instance for countries like Russia, is to avoid US sanctions and financial penalties for invading Ukraine. Countries looking to lessen their reliance on the US dollar should welcome the emergence of the BRICS currency. The currency has the ability to improve trade autonomy for developing nations and build a more secure and stable global financial system.

A wide range of nations, including Saudi Arabia, the United Arab Emirates, Argentina, Egypt, Bahrain, Indonesia, Algeria, and Iran, have already expressed interest in the BRICS currency project. The submission of proposals by two unnamed East African countries and one unidentified West African country is a glaring sign of the rising need for alternative currencies.

In this troubled world of ours, it is crucial to have additional currencies available for use in international trade besides to the US dollar. An important development that has the potential to upend the dollar's hegemony and build a more secure and stable global financial system is the establishment of the BRICS currency. The US dollar's status as the world's reserve currency is in jeopardy as more nations adopt other currencies, including the Chinese yuan.


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