Chinese experts have called on the leaders of the BRICS countries (Brazil, Russia, India, China and South Africa) to consider countering the dollar, whose global hegemony is considered abusive. Still, experts admit that any attempt to lessen the dollar’s dominance will take time.
Dependence of BRICS countries on the US-dominated global financial system
Chinese experts have urged the BRICS countries, namely Brazil, Russia, India, China and South Africa, to counter the global dominance of the dollar which is now being abused by the US government, according to a report. According to experts, the BRICS countries can achieve this by strengthening their trade ties and limiting their dependence on a financial system in which the US dollar dominates.
As explained in a Global Times reportthe call for experts came just before the foreign ministers of the five countries held a virtual meeting on May 19. At the meeting, the foreign ministers were expected to discuss building solidarity, building consensus, as well as giving a greater voice in global governance.
Arguing against the BRICS countries’ continued dependence on the US-dominated financial system, one of the experts, Cao Yuanzheng, president of BOC International Research, argued that the US only prioritizes to their national needs and are less concerned about the potential consequences. of its policies. Yuanzheng said:
International transactions and financial markets, which are dominated by the US dollar, have shown growing internal contradictions as Washington’s policies treat its domestic needs as the primary objective rather than international needs.
US dollar neutrality
The expert added that Russia’s recent sanction, along with the US government’s freezing of the former’s foreign exchange and gold reserves, means that the US dollar is no longer a neutral currency. Meanwhile, the report involved Chinese Yuan currency, which is popular in countries and regions along the routes of the Belt and Road Initiative, can be an alternative to the dollar. Therefore, an agreement between BRICS countries could potentially lead to increased use of the yuan in some regions, according to the report.
However, other experts interviewed by Global Times warned that reducing the US dollar’s dominance will take time. Similar sentiments were recently expressed by former Governor of the Central Bank of China, Zhou Xiaochuan. Xiaochuan has previously warned that reducing the dollar’s dominance will also depend on whether businesses and the public are willing to suddenly abandon a currency they have long used.
Tian Yun, a former vice director of the Beijing Economic Operations Association, suggested that the yuan’s chances of taking over the U.S. dollar’s place as the main settlement currency depends on other countries’ confidence in the progress of the China.
Yet another expert, Zhou Maohua, a macroeconomic analyst at Everbright Bank, spoke about the growing role of the Chinese currency in global payments, settlements and long-term foreign exchange reserves.
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