By Rhod Mackenzie

The Presidents of Brazil and South Africa, Luis Ignacio Lula da Silva and Cyril Ramaphosa, respectively, speaking on Friday, June 23, at the plenary meeting of the World Economic Forum in Paris, said that the upcoming BRICS summit will also discuss the currency issue. We are talking about the introduction of this organization, consisting of Brazil, Russia, India, China and South Africa, a single currency following the example of the eurozone.

First, the head of Brazil warned that the dominance of the dollar could cause great damage to poor countries.

“Why can't we trade (among ourselves) in our currencies?” he asked rhetorically, referring to Brazil's trade with Argentina and China.

The President of South Africa supported his BRICS colleague.

Janet Yellen decided to personally respond to these statements and devoted a large part of her press conference to explaining the reasons why the US dollar dominates world trade.

“There is a very good reason why the dollar is widely used in trading,” Yellen is quoted by the Financial Times. “We have very large, liquid and open capital markets, the rule of law and powerful financial instruments.”

Now, perhaps, we should highlight several areas that potentially pose a threat to the dollar.

First of all, this is Beijing's call to the oil-producing states of the Middle East to switch oil trade from the dollar to the yuan. In addition, China has been actively buying gold for seven consecutive months in order to diversify its foreign exchange reserves. Other central banks are also slowly replacing dollar reserves with other currencies, first of all. euro and yuan.

The BRICS members are also promising to issue a single currency, which they hope will eventually replace the dollar. In addition, the launch of national digital currencies will also become a negative for the dominant positions of the dollar.

This article appeared in Russian at expert.ru