After World War II, the US dollar asserted a dominant position in the global economic hegemony as an instrument of influencing international matters. It gained economic and political significance in the international arena due to its set reputation as an ideal and safe center for international investments.
This reputation was built based on the rapidly growing United States economy, its powerful democracy, and the transparent standards or regulatory systems prevalent in the US. In addition to this, the dollar’s ease of access, availability, and reliability have always been attractive to private investors and foreign economies.
However, a growing number of countries are now firmly backing the idea of reforming the
International financial system; they aim to safeguard themselves from Washington’s use of sanctions as a tool of political influence and to surpass the dollar as a dominant international currency.
The trend of distancing themselves from the US dollar’s hegemony has gained momentum in most nations, especially after the war in Ukraine, where sanctions had brought economic activities for
Russia’s institutions and 10,000 of its oligarchs to a screaming halt.
The countries most caught up to this trend are the BRICS nations; the resource-rich Brazil, Russia, and South Africa, benefited from the early 2000s commodity boom and its comeback in the early 2010s. China joined the World Trade Organization and surpassed all other countries in terms of merchandise exports by 2009. India developed and became a hub for global IT for the rest of the world.
Pavel Knyazev, the Russian ambassador to the BRICS, part of Russia’s Foreign Ministry stated that BRICS countries are working to establish a joint reserve currency to serve their shared objectives and to overcome the dollar’s dominance in global finance.
As an informal trade bloc, they align their political and economic policies, boost economic ties, and empower mutual strategic objectives. For the longest they have been working to find alternatives to the dollar-dominated global fund's transfer system known as SWIFT; In 2014, as a counter entity to the World Bank and the International Monetary Fund, they even created a $US50 billion New Development Bank.
Knyazev said that “The possibility and prospects of setting up a common single currency based on a basket of currencies of the BRICS countries are being discussed and the states are actively studying mechanisms to exchange financial information to develop a reliable alternative for international payments”.
In a development related to the said trend, China and Brazil have come up with an agreement to trade in their respective currencies, removing the dollar as an intermediary this will further push the states away from the dollar’s sphere of political and economic influence.
Such an agreement will allow China and the Latin American economic giant Brazil, to conduct trade and international business in a direct manner rather than going through Greenback.
Alliance of these countries to challenge the significance of dollar is a major step toward transforming the world’s economic and political order. Washington’s influence in dictating global policies is still massive but ongoing trends of revolutionizing trade and the international business arena tend to give US-controlled Nations a glimmer of hope to overcome the global economic and political shackles halting their development.
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