Vladimir Putin issues a stern message during the BRICS summit to the United States regarding a new Central Bank Digital Currency (CBDC) that aims to overshadow the US Dollar. This currency will be supported by Russia and China, intending to diminish the dollar's global influence.
As the upcoming US presidential inauguration approaches, both Putin and Chinese President Xi Jinping confront the dollar's supremacy.
This article focuses on the newly introduced BRICS CBDC named Unit+. It also explores whether the dollar is losing its dominance.
How Will a New BRICS Currency Affect the US Dollar?
A brief reminder: BRICS represents an alliance of Brazil, Russia, India, China, and South Africa, making them a formidable economic coalition globally. The group also includes potential participants in future geopolitical disputes such as Egypt and Iran.
At the recent BRICS meeting, two significant announcements were made:
- Introduction of the Unit+, a CBDC aimed at facilitating unbiased trade among BRICS nations.
- BRICS nations will now prefer using the Chinese Yuan for international trade instead of the US dollar, arguing that the Yuan is backed by tangible exports.
BRICS positions its CBDC as potentially saving up to $15 billion annually in transaction costs, while some analysts estimate it could save as much as $100 billion.
There are ongoing discussions regarding which blockchain technology to use for the BRICS CBDC—options may include XRP or XLM, leading cryptocurrencies for payment networks.
The Greatest Challenge to the USD as the Reserve Currency
In addition to the CBDC, world leaders discussed the Petroyuan, a new oil denomination, further supported by Saudi Arabia. Historically, oil sales have been conducted in US dollars, but cooperation with China and Russia might change this trajectory.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
– Satoshi Nakamoto
As time progresses, one must ponder whether the US dollar will maintain its reign or gradually decline under the influence of BRICS and its new strategies.
