Across the developing world, many countries are fed up with America\u2019s dominance of the global financial system — especially the power of the dollar.<\/p>\n
They will air their grievances next week as the BRICS bloc of Brazil, Russia, India, China and South Africa meet with other emerging market countries in Johannesburg, South Africa.<\/p>\n
But griping about King Dollar is easier than actually deposing the de facto world currency. The dollar is by far the most-used currency in global business and has shrugged off past challenges to its preeminence.<\/p>\n
Despite repeated talk of the BRICS countries rolling out their own currency, no concrete proposals have emerged in the run-up to the summit starting Tuesday. Emerging economies have, however, discussed expanding trade in their own currencies to reduce their reliance on the buck.<\/p>\n
At a meeting of BRICS foreign ministers in June, South Africa\u2019s Naledi Pandor said the bloc\u2019s New Development Bank will seek alternatives \u201cto the current internationally traded currencies\u201d — a euphemism for the dollar. Pandor was sitting alongside Russia\u2019s Sergey Lavrov and China\u2019s Ma Zhaoxu — representatives of two countries that are especially eager to weaken America\u2019s international financial clout.<\/p>\n
The BRICS grouping dates to 2009. Originally, it was just BRIC, a term coined by Goldman Sachs economist Jim O\u2019Neill to refer to the rising economies of Brazil, Russia, India and China. South Africa joined in 2010, adding the \u201cS\u201d to the name. More than 20 countries \u2014 including Saudi Arabia, Iran and Venezuela \u2014 have expressed interest in joining BRICS.<\/p>\n
In 2015, the BRICS countries launched the New Development Bank — an alternative to the US and European-dominated International Monetary Fund and World Bank.<\/p>\n
\u201cDeveloping nations are itching to loosen the grip of Western dominance and open the door to a new world order where the East commands equal, if not greater, influence,\u201d said Martin Ssempa, a Ugandan political activist.<\/p>\n
Critics in the developing world are especially uneasy about America\u2019s willingness to use the dollar\u2019s global influence to impose financial sanctions against adversaries — as it did to Russia after the invasion of Ukraine last year.<\/p>\n
They also complain that fluctuations in the dollar can destabilize their economies. A rising dollar, for instance, can cause chaos abroad by drawing investment out of other countries. It also increases the cost of repaying loans denominated in dollars and buying imported products, which are often priced in dollars.<\/p>\n
Kenyan President William Ruto has grumbled this year about Africa\u2019s dependence on the dollar and the economic fallout from its ups and downs, while the Kenyan shilling plunges in value. He has urged African leaders to join a fledgling pan-African payments system that uses local currencies in a push to encourage more trade.<\/p>\n
\u201cHow is US dollars part of the trade between Djibouti and Kenya? Why?\u201d he asked at a meeting, to applause. Brazilian President Luiz In\u00e1cio Lula da Silva has supported a common currency for commerce within the South American bloc Mercosur and for trade among BRICS nations.<\/p>\n
\u201cWhy does Brazil need the dollar to trade with China or Argentina? We can trade in our currency,\u201d he told reporters this month. But if the dollar\u2019s drawbacks are easily apparent, the alternatives to it are not.<\/p>\n
\u201cAt the end of the day, if you want to keep your reserve safe, you\u2019ve got to put it in the dollar,\u201d said Daniel Bradlow, a senior research fellow at the University of Pretoria and a lawyer specializing in international finance. \u201cYou\u2019re going to need to borrow in dollars. Everybody can see all the problems with doing this, but if there was an alternative, people would use it.\u201d<\/p>\n
As it stands, 96 percent of trade in the Americas from 1999 to 2019 was invoiced in dollars, 74 percent of trade in Asia and 79 percent everywhere else, outside of Europe, which has the euro, according to calculations by US Federal Reserve researchers.<\/p>\n
Still, the dollar\u2019s hold on global commerce has loosened somewhat in recent years as banks, businesses and investors have turned to the Euro and China\u2019s yuan.<\/p>\n
But 24 years after the euro was introduced, the world\u2019s No. 2 currency still does not rival the dollar for international gravitas: The dollar is used in three times as many foreign-exchange transactions as the Euro, Harvard University economist Jeffrey Frankel said in a study last month. And the yuan is limited by Beijing\u2019s refusal to let the currency trade freely in world markets.<\/p>\n
\u201cNone of the alternatives to the dollar managed to get to the dominance level,\u201d said Mihaela Papa, senior fellow at Tufts University\u2019s Fletcher School of global affairs. \u201cSo the idea that now, overnight, you will have a new BRICS currency that would (cause) a major upheaval \u2014 it takes time, it takes trust … I see this path as very long.\u201d<\/p>\n
The dollar still has its supporters. In Argentina, Javier Milei, who emerged from primary voting Monday as the front-running presidential candidate in October\u2019s general election, is calling for the dollar to replace the country\u2019s embattled peso.<\/p>\n","protected":false},"excerpt":{"rendered":"
Across the developing world, many countries are fed up with America\u2019s dominance of the global financial system — especially the power of the dollar. They will air their grievances next week as the BRICS bloc of Brazil, Russia, India, China and South Africa meet with other emerging market countries in Johannesburg, South Africa. But griping […]<\/p>\n","protected":false},"author":16,"featured_media":136660,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,21],"tags":[],"class_list":["post-136659","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-world-news"],"yoast_head":"\n