The Brics nations (Brazil, Russia, India, China, and South Africa) have been discussing the idea of deplatforming the U.S dollar as the world’s reserve currency for several years now. This concept has gained a lot of attention in recent times, with the increasing tensions between the United States and China, and the impact of the Covid-19 pandemic on the global economy.
Chinese President Xi Jinping was warmly hosted by Russian President Vladimir Putin during late March in Moscow for the second of three Belt and Road Summits. These three summit meetings of the Chinese and Russian leaders is laying the foundation for the Brics nations currency block. At a joint press conference Xi and Putin both stated, “the Brics nations will bring a new world order to the global financial market.” Vladimir Putin will travel to Beijing sometime during the Summer of 2023 for the third and final Road and Belt Summit.

The US dollar has been the dominant global reserve currency for over 70 years since the Bretton Woods agreement in 1944. The currency is used for international trade, investments, and as a reserve currency by central banks around the world. The US dollar’s dominance in the international financial system has allowed the United States to have an outsized influence on the global economy and international politics.

However, the Brics nations have been challenging the U.S. dollar’s dominance for years. They argue that the U.S. dollar’s status as the world’s reserve currency has given the United States too much power over the global financial system, and that it is time for a more balanced and diversified system.

There are several reasons why the Brics nations are considering deplatforming the US dollar.

Firstly, they argue that the U.S. dollar’s dominance has allowed the United States to pursue an aggressive foreign policy that has destabilized many parts of the world. They also point to the U.S. Federal Reserve’s monetary policy, which has led to a long period of low interest rates and easy money, which has created asset bubbles and financial instability.

The Brics nations are also concerned about the U.S. dollar’s vulnerability to geopolitical risk.

The United States has a history of using economic sanctions as a tool of foreign policy, which can have a devastating impact on countries that rely on the U.S. dollar for international trade. For example, the U.S. sanctions on Iran have severely impacted the country’s economy, despite efforts to circumvent the sanctions.

Another factor driving the Brics nations’ push to deplatform the U.S. dollar is the increasing economic and political power of China. China has been aggressively promoting its currency, the yuan, as an alternative to the US dollar. The country has signed currency swap agreements with over 30 countries, allowing them to bypass the US dollar in international trade. China is also investing heavily in its Belt and Road Initiative, which aims to increase trade and economic integration between China and other countries in Asia, Africa, and Europe.

The Covid-19 pandemic has further highlighted the risks of relying on a single currency for international trade and finance.

The pandemic has caused significant disruptions to global supply chains and has led to a sharp decline in international trade.
Countries that rely heavily on the U.S. dollar have been particularly vulnerable to these disruptions, as they have struggled to access U.S. dollars to pay for imports and service their debt.

Given these factors, it is not surprising that the Brics nations are looking for alternatives to the US dollar. However, deplatforming the US dollar is not an easy task.

The U.S. dollar’s dominance is deeply entrenched in the global financial system, and any attempt to replace it would require significant coordination and cooperation between countries.

The Brics nations have taken several steps towards deplatforming the U.S. dollar.

For example, they have established the New Development Bank, which provides financing for infrastructure projects in developing countries.

The bank is funded in the currencies of the member countries, rather than the US dollar. The Brics nations have also been promoting the use of their own currencies in international trade, rather than the U.S. dollar.

However, these efforts have been largely symbolic so far. The U.S. dollar remains the dominant. currency in international trade and finance, and it will likely remain so for the foreseeable future. The Brics nations will need to take more concrete steps to deplatform the U.S. dollar if they want to challenge its dominance.

One possible step that the Brics nations could take is to diversify their foreign exchange reserves away from the U.S. dollar.

Many central banks hold a significant amount of US dollar reserves, but diversifying these reserves into other currencies could help reduce their dependence on the U.S. dollar.

This would require the development of deeper and more liquid markets for other currencies, particularly the yuan, which remains a relatively small player in the international financial system.

Another possible step is for the Brics nations to create their own international payment system, similar to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which is currently dominated by the U.S. Such a system would allow the Brics nations to bypass the US-dominated financial system and conduct international transactions in their own currencies. This would require significant investment in the development of the necessary infrastructure, but it could help reduce the Brics nations’ dependence on the U.S. dollar.

However, deplatforming the U.S. dollar is not without risks. The US dollar’s dominance has helped to provide stability to the global financial system, and any significant disruption to this system could have far-reaching consequences. It is also unclear whether the Brics nations would be able to coordinate their efforts effectively, given their differing political and economic interests.

Furthermore, any attempt to deplatform the US dollar could lead to a backlash from the United States.

The U.S. government could use economic sanctions or other measures to try to undermine the Brics nations’ efforts to reduce their dependence on the US dollar.

This could lead to further tensions and instability in the global financial system.

The deplatforming of the U.S. dollar by the Brics nations is a complex and challenging issue. While the Brics nations have taken some symbolic steps towards reducing their dependence on the U.S. dollar, any significant attempt to deplatform the currency would require significant coordination and cooperation between countries. It is also unclear whether the benefits of deplatforming the U.S. dollar would outweigh the risks and potential costs.

However, given the changing global economic and political landscape, it is likely that the debate over the future of the international financial system will continue for some time.