BRICS, Yuan "total attack", is the USD still king?

The decline of the US dollar as the world's reserve currency has been a subject of much ink for many years, especially after the global financial crisis of 2007-2008.

The US dollar has served as the world's leading reserve currency since World War II. (Source: The Bit Times)

According to the Atlantic Council's Dollar Dominance Index, the greenback's share of global reserves will stand at 58% in 2024, down 14 percentage points from 2002.

The US dollar has served as the world's leading reserve currency since World War II, according to a report by the Atlantic Council.

In recent years, especially since the Russia-Ukraine conflict and the Group of Seven (G7) increased financial sanctions, some countries have sought to diversify away from the US dollar.

The pace of de-dollarization has increased in recent years, and researchers point to one development that has accelerated the trend: the rise of the BRICS group of emerging economies.

“Over the past 24 months, BRICS members have actively promoted the use of national currencies in trade and transactions,” the report said.

At the same time, China is expanding its alternative payment systems to trading partners and seeking to increase the global use of the renminbi (RMB).

"BRICS is a potential challenger to the US dollar's dominance. The group accounts for an increasingly large share of global GDP, and each member country has signaled a desire to transact more in national currencies," Atlantic Council researchers said.

In particular, the RMB has the highest potential to compete with the USD as a trade and reserve currency.

The report identifies two key indicators that show the growing strength of the alternative financial infrastructure that China is building: “China’s currency swap agreements with BRICS countries and members of the China Cross-Border Interbank Payments System (CIPS).

Still, the US dollar continues to lead in foreign exchange reserves, trade bills and currency transactions globally, the report said.

“All potential rivals, including the euro, are unlikely to challenge the dollar’s ​​position in the near future,” the report said.

Based on the six “essential characteristics of a reserve currency” set out by the Atlantic Council, the Euro is the most suitable currency to become a reserve currency after the USD, followed by the RMB.

Source: https://baoquocte.vn/brics-nhan-dan-te-tong-tan-cong-dong-usd-co-con-la-vua-282401.html