BRICS currency is the talk of the town lately as the alliance is looking to trounce the US dollar’s dominance. Brazil, which chairs the upcoming summit in July confirmed that the bloc is working on a new payment system where non-members will be allowed to settle transactions. The development could be a game-changer after launch as the US dollar will not be incorporated into the payment mechanism.

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The threat of a BRICS currency is looming large and the superiority of the US dollar remains under pressure. Developing countries want to disassociate with the USD as it carries the risk of debt. Holding it in their central banks without diversifying their assets leads to bigger financial issues, including absorbing inflation. Emerging nations are turning to protectionists in a bid to safeguard their economies from America’s debt.

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Will BRICS Currency Defeat the US Dollar?

Jack Truong, the former global CEO of Illinois-based James Hardie Industries analyzed the power of the US dollar against the upcoming BRICS currency. Truong predicted that the US dollar would not be dismantled by BRICS as their currency might fail to gain global trust. He explained that when the British empire fell after World War II, it took decades for the world to gain trust in the USD.

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The Illinois-based analyst highlighted that the US dollar is used in 85% of all global spot transactions. In addition, three-fourths of all Asia-Pacific trade is also denominated in the USD. A newly launched BRICS currency might not replace the US dollar as the greenback withstands the whiplash of the markets.

“History teaches us that widespread currency adoption does not happen overnight. Despite the American economy eclipsing that of the British Empire in the early 20th century, it took decades of trust-building. BRICS currency faces a daunting task to replicate or even challenge this pathway to (US dollar) dominance,” he summed it up.