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The dollar’s world reserve currency status has taken a series of hits amid the escalation of the Ukraine crisis into a full-blown NATO-Russia proxy war. The US’ staggering debt, other nations’ efforts to increase trade in local currencies, and talk of new reserve currencies have fueled speculation about the dollar’s vaunted status reaching its end.
The BRICS bloc's push to create a new trade and reserve currency that can serve as an alternative to the dollar could start chipping away at the greenback's hegemony in less than three months' time, former CIA and Department of Defense advisor and investment banker James Rickards has predicted.
"On August 22, about two-and-a-half months from today, the most significant development in international finance since 1971 will be unveiled," Rickards wrote in a major independent US business news outlet, referring to the start date of the upcoming BRICS Leaders’ Summit Conference in South Africa, and the day in 1971 when the US went off the gold standard.
"It involves the rollout of a major new currency that could weaken the role of the dollar in global payments and ultimately displace the US dollar as the leading payment currency and reserve currency," the observer added, predicting that this tectonic shift could take place over a period of "just a few years."
Rickards expects the push for the new currency being discussed by the BRICS countries of Brazil, Russia, India, China, and South Africa to "affect world trade, direct foreign investment and investor portfolios in dramatic and unforeseen ways," and cause a profound and "unprecedented" geopolitical shockwave" that the world may not be prepared for.
Along with the BRICS nations themselves – whose combined economic might is already greater than that of the Group of Seven Western industrial economies, Rickards cited the expansion of the bloc’s membership as "the most important development of the BRICS system," with eight countries already formally applying for membership, and over a dozen more expressing interest in joining. Among the former are global economic heavyweights like Argentina, Egypt, Indonesia, Iran, and Saudi Arabia – the latter country a keystone of the petrodollar system ensuring the stability of the dollar’s world reserve status.
Furthermore, the current BRICS countries account for 30 percent of the world's surface area and related natural resources, 50 percent of global wheat and rice production, and 15 percent of the planet’s gold reserves. BRICS also account for 40 percent of the world’s population, and, pending Saudi membership, 28 percent of nominal global GDP, and 52 percent when measuring by purchasing power parity (PPP).
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