The world relies on various forms of currency to use for the exchange of goods and services between countries. Currently, the US dollar is the most common medium of exchange and is known as the world’s ” reserve currency.”
That means that most goods and services acquired between countries commonly use the US dollar as the preferred medium of exchange. It’s proven to be the strongest and safest currency on the planet.
In addition to the United States, other powerful trading partners in the world are the “BRICS” nations.
The group is composed of Brazil, Russia, India, China, and South Africa. These nations are forming an alliance that could threaten the world dominance of the US dollar.
China is the group’s most powerful member, but other countries have expressed interest in joining. Thirteen nations, including Saudi Arabia, have presented a formal invitation to join, and an additional six have expressed an informal interest. Applications from other nations are arriving daily, according to the group’s South African representative, Anil Sooklal.
In March, Egypt’s members of its parliament would like to see reduced dependency on US dollars. As a result, Egypt has entered into an agreement with the BRICS New Development Bank. In 2020 the bank’s board opened the door to discussions with other BRICS members.
An annual meeting of the group is planned for early June in Cape Town, South Africa. The discussion will center on trade and the possible currency used between the nations instead of the US dollar. China is proposing a new international economic order.
China encourages countries to barter using their currencies instead of the US dollar. China would favor its currency, the yuan, over the dollar for global trade.
Smaller nations have reservations that if too many allies of China are added to the group, they might have an economic advantage over the other smaller members.
Conversely, US sanctions against Russia over Ukraine demonstrate that an alternative currency might be needed if sanctions are used against other countries forced to use the US dollar for trade.