Professor Ashok Swain of Uppsala University’s Department of Peace and Conflict Research believes that Saudi Arabia becoming a member of the Shanghai Cooperation Organization (SCO) or the BRICS economic bloc would accelerate the use of the Chinese yuan as a trading currency. Last month, this was confirmed when Saudi Crown Prince Mohammed bin Salman Al Saud discussed potential collaboration between Saudi Arabia and the BRICS with Russian President Vladimir Putin.

On top of this, Saudi Arabia is also actively negotiating with Beijing to price some of its oil sales to China in yuan, which could be a “huge step” for China and “a significant setback to the dollar’s standing” according to the professor. This move has been encouraged by other countries shifting away from the U.S. dollar to settle trades, with the Chinese yuan recently replacing the USD as the most traded currency in Russia and the most used currency to settle cross-border payments in China.

The BRICS group is also working to create a new currency and former White House economist believes that this will erode the U.S. dollar’s dominance. Even if the currency isn’t introduced, another economist believes that the yuan and euro will disrupt the U.S. dollar’s dominance and the three will form a tripolar reserve currency world.

Given the current state of the global economy, it is clear that several nations have the potential to benefit from a shift away from U.S. dollars to more diverse international trading currencies. Whether this shift comes from the widespread acceptance of the Chinese yuan, the introduction of a BRICS currency, or the establishment of a tripolar reserve currency, the exchange of this new currency could not only improve international trading arrangements but also bolster global financial liquidity.



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