What Happens to the U.S. Dollar if BRICS Launch New Currency?

The BRICS alliance will launch a new currency to settle global trade and end reliance on the U.S. dollar. The move will create an alternative reserve currency and challenge the dollar’s supremacy. Currently, the U.S. dollar serves as the de facto reserve currency and is widely held by Central Banks around the world and used for international transactions.

If the new BRICS currency were to gain significant traction and acceptance among countries, it could contest the U.S. dollar’s status as the primary reserve currency.

Also Read: What Happens if Saudi Arabia Accepts BRICS Currency?

Will The U.S. Dollar Crash If BRICS Launch New Currency?

US dollar
Source: schroders.com

The new BRICS currency could lead to a gradual shift in global currency reserves away from the U.S. dollar. The development could potentially reduce the demand for U.S. dollars and weaken its position in international markets.

A decrease in demand for the dollar leads to the depreciation of the currency, as it loses supply and demand dynamics.

Also Read: After BRICS, 10 ASEAN Countries Ditch The U.S. Dollar

However, the U.S. dollar’s status as the world’s reserve currency is based on a variety of factors. The factors include the size and stability of the U.S. economy and the trust and confidence placed in the currency. Any significant impact on the U.S. dollar’s status would require a substantial shift in global economic and geopolitical dynamics.

BRICS Nations Leading International Interest in Bitcoin
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Additionally, launching a new currency involves numerous challenges and complexities, including coordination among the BRICS countries. The new tender needs to build credibility and confidence in the global markets.

The BRICS alliance needs to create the necessary infrastructure and institutions to support its use on a global scale. These factors would play a crucial role in determining the success of the new BRICS currency in the financial system.

Also Read: Ahead of Joining BRICS, Iraq Issues Ban on U.S. Dollar Transactions

In conclusion, the U.S. dollar could remain a dominant force as the soon-to-be-released BRICS currency is yet to prove its mettle.

BRICS is an alliance of Brazil, Russia, India, China, and South Africa. The next summit will be held in Cape Town, South Africa in August 2023. The decision to launch a new currency will be combinedly and taken at the summit.