Recent developments in the global economy have seen the rise of a new challenge for the US dollar as the default currency for global transactions. The largest emerging economies are banding together to challenge the use of the dollar as the international currency, putting forth a potential plan to weaken its dominance.
Currently, the US dollar comprises around 60% of total global foreign exchange reserves and is widely used in international trade and financial transactions. However, this situation has led to concerns about overreliance on a single currency and the potential risks associated with its continued use.
In response to these concerns, the BRICS countries (Brazil, Russia, India, China, and South Africa) have proposed a new system that would allow for greater use of their own currencies in international transactions, thereby reducing the need for the dollar.
This plan would involve creating a new financial infrastructure that would allow for direct transactions between the currencies of the BRICS countries and could potentially support other emerging market currencies as well.