A monetary judge has discussed how a BRICS-wide common currency might compete with the US dollar. She noted that only China was a member of the BRICS economic team to have such a reserve currency and that both foreign exchange reserves and investor confidence were required.
Yeah that article is great, and it is definitely a fight that will be fought in the near future. Unfortunately, I think because it has monetary value & is discussed constantly as a "currency" that a judge will care very little about the "it's just information" argument.😕
— Guy Swann ⚡️ (@TheGuySwann) August 22, 2019
Economist on the Chinese Yuan and Reserve Currency
Nicky Weimar, the chief economist of the South African financial services company Nedbank, spoke last week on how a suitable BRICS currency may threaten the power of the U.S. dollar, according to Independent Online. Brazil, Russia, India, China, and South Africa make up the BRICS group.
Paul Krugman on the Future of U.S. Dollar Dominance and the Chinese Yuan
— CleverRobot (@CleverRobotHQ) July 19, 2023
Weimar stressed that in order to achieve the economic bloc’s goal of reducing its support for the USD and developing a reserve currency comparable to the USD:
You require both foreign currency reserves and the confidence of the investing community.
The Federal Reserve’s backing, which the market trusted, led to the U.S. dollar becoming the world’s reserve currency, the economist added.
It’s seems it’s what’s backing the Federal Reserve’s gold certificates.
The Federal Reserve surrendered its gold to the Treasury in 1934 in return for those certificates (no point giving them Federal Reserve notes LOL). Without the physical, those certificates are just paper.
— Everyone a Billionaire (@jeremy1174) December 14, 2022
“The United States has never had a debt default. Although it has often made people feel uneasy, it has never truly defaulted on its debts. For any of the BRICS member nations, the same cannot be stated. That’s the first issue, according to Weimar. In the thick of a recent debt limit crisis, the United States was able to avoid defaulting on its debt obligations.
According to Weimer, the second issue was that China was the only member of the BRICS economic bloc to hold such a reserve currency. He continued:
According to the Census Bureau. pic.twitter.com/P3YhYOEszW
— MichaelPaul424 (@Michael51736816) April 23, 2023
But capital controls exist in China. If you have capital controls, you cannot have a reserve currency. Therefore, if China genuinely wants to compete with the dollar, it will need to undertake significant financial liberalization in order to make this possible.
In particular, China and Russia are encouraged to do business abroad, buy houses, but not naturalize, so that more Chinese and Russian capital can be globalized and internationalized. China&Russia capital controls and exchange rate controls cannot exist forever.
— Kris Blake🇩🇪🇮🇹🇹🇼 (@krislabert) June 10, 2022
She observed that China is capable of doing this but that significant changes must be made and said, “I don’t actually see them talking along those lines. It almost seems as though they haven’t yet realized that you need to lose some control. Additionally, you must always be prepared to give it.