The United States is taking notice of the international economic alliance known as BRICS (Brazil, Russia, India, China and South Africa). The group has plans to launch a new currency that could rival the U.S. dollar and is looking to expand its membership to more than a dozen countries across the continent of Africa.
While the US State Department hasn’t given a stance on potential BRICS expansion, officials are emphasizing the US policy of encouraging democratic governance, human rights and economic opportunity for individuals worldwide.
“We are focused on demonstrating the benefits of our governance and economic models. Our policy does not require our partners to choose between the US and other countries.”
The countries reportedly interested in joining BRICS include Saudi Arabia, Iran, Egypt, Bahrain, Algeria, Argentina, and Indonesia in addition to three undisclosed African nations. Foreign ministers from the five BRICS nations will be meeting in June to discuss development of the new currency and potential expansion.
The new currency is expected to be tied to gold, along with other assets. Given the state of the US dollar, for many countries choosing to join BRICS could bring crucial stability as a hedge against the US currency’s volatility.
The potential expansion of the BRICS alliance is undoubtedly concerning for the US economy and its reliance on the US dollar as the world’s reserve currency. If the BRICS alliance is successful in launching its global currency, it could pose the highest threat to the US dollar’s constant dominance since the Bretton Woods System collapsed in 1971.
In the wake of the US ditching the gold standard, the US dollar has come to rely heavily on foreign investors’ trust in its economy. But if BRICS nations are able to launch a new currency with true economic clout, its effects on the US dollar could be dramatic.
Though it is yet to be seen whether or not the BRICS alliance would be able to organize, launch and maintain such a currency, this development shows the increasing importance of international alliances and the need for economic stability.
Parker Kelly
- 2023-05-06
BRICS Expansion Poses Threat to US Dollar
The United States is taking notice of the international economic alliance known as BRICS as the group looks to expand across the continent of Africa and launch a new currency that could rival the US Dollar.
