BRICS Uses Gold & Oil to Weaken the Dollar
Latest Update: BRICS Economic Alliance Pushes De-Dollarization in 2024
The economic alliance BRICS, consisting of Brazil, Russia, India, China, and South Africa, has made significant strides in its de-dollarization mission in 2024. Central to this effort is the increased production of gold and oil, aimed at reducing the dominance of the US dollar.
Driven by its founding members and newly inducted countries, the bloc is determined to replace the US dollar as the primary global reserve currency.
Gold and Oil: Cornerstones of the BRICS Strategy
Gold has long been a reliable store of value, particularly during economic uncertainty. In recent years, BRICS members, especially China and Russia, have substantially boosted their gold reserves.
China, the world's largest gold producer, has intensified efforts to build up its reserves, aspiring to establish the yuan as a key international reserve currency. Russia has leveraged gold to shield itself from Western sanctions and to diversify its reserves away from the US dollar.
These countries are now exploring the creation of a gold-backed currency for international transactions within the BRICS bloc, aiming to foster trust among trading partners and lessen reliance on the dollar.
Oil is another strategic asset in BRICS' de-dollarization agenda. Russia, one of the world's top oil producers, has begun selling oil in currencies like the ruble and yuan, marking a significant move away from the traditional dollar-based oil trade.
Middle Eastern countries, including longtime US ally Saudi Arabia, are increasingly open to diversifying their economic ties and considering accepting other currencies for oil transactions. This shift could herald a major change in the global financial system.
Building Financial Infrastructure for De-Dollarization
The BRICS are also investing in financial infrastructure to support their de-dollarization goals. The New Development Bank (NDB), established by the BRICS, finances development projects within the bloc, reducing reliance on Western financial institutions like the International Monetary Fund (IMF) and the World Bank. The NDB has begun issuing loans in local currencies, further encouraging the use of national currencies in trade and investment.
Additionally, the creation of alternative payment systems, such as China’s Cross-Border Interbank Payment System (CIPS), offers an alternative to the US-dominated SWIFT system, enabling BRICS countries to conduct international transactions without involving the dollar and mitigating exposure to US financial sanctions.
Challenges and Future Prospects
Despite the progress, de-dollarization faces significant hurdles. The US dollar remains deeply embedded in the global financial system, with most international trade still conducted in dollars. Its liquidity and stability continue to make it an attractive option for investors and governments worldwide.
However, the BRICS' commitment to diversifying their reserves and promoting national currencies could gradually undermine the dollar's dominance. With rising geopolitical tensions and economic instability, the search for dollar alternatives is becoming increasingly pertinent.
Conclusion
The year 2024 has been pivotal for the BRICS economic alliance in its de-dollarization mission. By focusing on gold and oil, the bloc aims to reduce reliance on the US dollar and foster a more multipolar financial system. Through expanding gold reserves, selling oil in alternative currencies, and developing independent financial infrastructures, the BRICS are challenging the dollar's supremacy and reshaping the global economic landscape.
The success of de-dollarization will depend on the BRICS' ability to maintain cohesion and expand their economic influence. If successful, the international financial system could undergo significant transformation in the coming decades.
Source: The Cryptonomist