Amid de-dollarization efforts and the rising prominence of the economic bloc, it is fair to ask how BRICS could affect the US economy. Specifically, as the collective grows in prominence, and takes aim at the greenback, America could be facing certain economic outcomes. 

The US dollar has been firmly entrenched as the global reserve currency since World War II. Yet, 2023 has brought to the forefront a potential end to that event. Moreover, as the BRICS bloc has focused on an increase in their economic influence in the world, their native currencies have seen similar rising prominence. Consequently, this has an adverse effect on the US dollar. 

BRICS Rising Power

Throughout the year, the rise of the BRICS bloc has been a constant headline. Moreover, as Western sanctions have separated the West from Russia, the world has followed suit. Thus, leading to a separation between the West, and BRICS.

Yet, as that delineating reality continues to evolve, BRICS presents a force that could affect the US economy, and push de-dollarization. Specifically, due to its direct impact on the global presence of the US dollar. A presence that the BRICS nations have been outspoken about limiting.

Amid the recent rise, national currencies like the Chinese yuan have grown in use. Subsequently, it is becoming a relevant currency in international settlements, allowing a supplemental currency for the US dollar. 

Alternatively, Russia has led efforts to create a replacement for the greenback internationally and push ahead with de-dollarization efforts. Now that the BRICS currency is being developed, an agreement is expected this year. Susbeuqnelty provides a potential reserve currency replacement for the dollar. 

Effect on the US Economy

It would be unrealistic to believe that these developments would have no impact on the US economy. Contrarily, a collapse of the dollar would lead to inflation in the US. Subsequently, a decrease in its value would follow, which could be dangerous for the citizens of the country.

Prices across the country would increase, which would impact Americans already battling inflation. Alternatively, macroeconomic circumstances are already presenting a fragile economic outlook for the country. Along with potential debt default, the country’s financial situation is becoming increasingly volatile. 

To fight back against these dangerous situations, there must be action. Specifically, the US has to stabilize its currency amid international action. Moreover, doing things like reducing the national debt or increasing US exports to increase dollar demand could be active steps.

However, the BRICS currency’s presence in global trade is undeniable. Subsequently, fighting seems immensely difficult considering the other factors present in the economy currently. Conversely, many predict an eventual negative fate for the US dollar.

Ahead of its annual summit this summer, the BRICS bloc is set to cover its plans for expansion and work on the creation of its own US dollar rival. Moreover, the collective has already stated that a host of countries are seeking membership. 

The nations have firmly defined their shift in global power, but that may only continue. Specifically, the bloc has surpassed the G7 nations in GDP (PPP) and could continue to rise, as nearly 20 countries are seeking entry into the collective.

Alternatively, the development of a BRICS currency is underway, with the expectation of an agreement by this year. Moreover, the expansive effort coinciding with currency development could initiate the eventual dethroning of the greenback as a global reserve currency. 

BRICS Expansion Could Spell Doom for US Dollar

On the road to the annual BRICS summit, the idea of growth has been often discussed. Specifically, a host of nations have expressed their interest in joining Brazil, Russia, China, India, and South Africa. Moreover, the collective is as welcoming as they have ever been to the idea.

Created in 2009, South Africa was the most recent expansive member. The nation joined the collective only one year after its creation, in 2010. Alternatively, the group has already created a bloc that rivals that of the G7 countries. 

Yet, the reality is that the BRICS bloc’s plans for potential expansion could eventually create a currency that rivals the US dollar. At least in the realm of international settlements. Moreover, as the creation of the BRICS currency has been discussed, the implementation of US dollar alternatives has been present throughout international trade this year.

The Chinese yuan has been embraced internationally and prevailed on a global scale. Conversely, if the BRICS bloc grows, the dollar will continue to see its necessity fade. Subsequently paving the way for an alternative currency that an expanded BRICS collective will surely embrace. 

Unity Required for Continued Prosperity

BRICS already accounts for 41% of the world’s population, or a quarter of global GDP. Moreover, BRICS has developed a clear alternative to the G7, but its interest among nations presents a very intriguing development. However, unity remains a necessity for the greenback to falter. 

The Globe and Mail quoted Stephen Nagy, a Chinese foreign policy expert at Tokyo’s International Christian University, on the currency’s evolution. Stating that “the challenge is, however, that the Chinese economy is slowing,” facing various challenges. 

Additionally, he states that BRICS are a “less coherent group than one might think,” regarding unification. Subsequently noting that China and India maintain a dispute that could threaten to become a conflict. Ultimately, unification is the prime word for any de-dollarization efforts to fully take hold.