A common currency for BRICS could be a big problem for the US because it would permanently increase the country's borrowing costs, said Vivek Ramaswami, an Indian-American and 2024 US presidential candidate. warned. BRICS is a union of major emerging economies: Brazil, Russia, India, China, and South Africa.
Billionaire entrepreneur-turned-politician Ramaswamy said BRICS is establishing a gold-backed currency as the world's reserve currency to replace the dollar. „This is a big problem for the United States,“ he said in response to a question about the unbacked dollar. „If the dollar is no longer the world's established reserve currency, it will permanently increase borrowing costs. ” he said. The product loses its value.
Also read: Why BRICS expansion is so serious for the global economy
The 38-year-old US presidential candidate said this was „not the best time to increase our own borrowing costs,“ especially since this was happening at a time when the US national debt was at $34 trillion. Ta.
“Yes, in fact, it is important. But the right way to deal with it is not to try to beat it, but to enhance the value proposition of the dollar itself by pegging it to hard commodities.” he said. Moreover, he added, the sole mission of the Federal Reserve, the central bank of the United States, should be the stability of the dollar, the stability of the dollar as a unit of measurement.
The US dollar currently serves as the world's primary reserve currency, which provides several benefits for Washington, including facilitation of global trade, lower borrowing costs, and higher demand for financial assets. However, if the dollar were to cease to be the world's reserve currency, its value would decline, potentially impacting the purchasing power of U.S. consumers and businesses and the competitiveness of U.S. exports.
At the last summit of the BRICS Alliance held in Johannesburg, South Africa in August 2023, Brazilian President Lula da Silva announced that the BRICS countries should increase their mutual trade and investment as a means of reducing their vulnerability to dollar exchange. proposed the creation of a common currency for the Rate fluctuations.
Also read: “India, China need to strengthen cooperation on…”: SBI report on the future direction of BRICS+6
Just a month earlier, India's External Affairs Minister Dr. S. Jaishankar said there was no proposal to create a BRICS currency at this time. „Currency will continue to be a national issue for a long time to come,“ he said. The Johannesburg II Declaration of August 23, 2023 also made no mention of a common currency.
“We emphasize the importance of encouraging the use of local currencies in international trade and financial transactions between BRICS countries and their trading partners. We also emphasize the importance of strengthening correspondent banking networks among BRICS countries and We also encourage the enablement of payments in other countries,” the joint statement said. The declaration said.
However, Russian President Vladimir Putin said in a video address to participants of the BRICS Business Forum that the process of de-dollarization is becoming irreversible across BRICS countries. „A balanced and irreversible process towards de-dollarization of economic relations between the two countries is gaining momentum, with efficient mechanisms for mutual payments, financial and Efforts are underway to develop cash management.“
“As a result, the share of the dollar in import and export transactions within BRICS has declined, and last year it accounted for only 28.7%,” he said, adding that during the BRICS summit, leaders of member countries would He added that he would discuss it. All issues related to the transition to national currencies in all areas of economic cooperation.