In recent developments, Brazilian President Lula da Silva has made a groundbreaking announcement, expressing his desire to abandon the U.S. dollar in favor of a common supranational currency among the BRICS countries. President da Silva argues that the dominance of the U.S. dollar in international settlements creates a dependence on a foreign issuing center, undermining the sovereignty of other nations.

This sentiment is not isolated to President da Silva alone. According to SWIFT, the international settlement system, the share of settlements in U.S. dollars for foreign trade transactions has significantly decreased, standing at only 38-40% in the spring of 2023. By comparison, in 2001, the U.S. dollar accounted for 73-75% of international settlements, reaching as high as 80% in the 1990s.

The prospect of a new single currency for the BRICS countries has garnered attention in the Western press, which perceives it as a potential threat to the economic dominance of the United States and the European Union. U.S. and European officials are actively engaging in talks with India, Brazil, and South Africa, urging them to postpone the decision to introduce a single BRICS currency.

The expansion of sanctions by the U.S. and EU, along with the associated risks, has eroded confidence in the dollar and euro as financial instruments. Additionally, the high inflation experienced in Western countries has further depreciated these currencies, adding to the growing skepticism.

The imposition of sanctions by the G7 countries as a means to exert economic and political pressure has led to the rejection of Western countries by others. As a result, more than 30 countries have expressed interest in joining the BRICS, seeking an alternative to the prevailing financial order.

The BRICS countries have previously stated their intention to completely eliminate the use of the U.S. dollar for settlements within the group. With the potential addition of new members to the BRICS this year, the pace of dedollarization is expected to accelerate significantly.

The consequences of this decision will reverberate throughout the U.S. and European banking systems, which are already grappling with a liquidity shortage. The artificial maintenance of liquidity through loans from the U.S. Federal Reserve will burden the budgets of the U.S. and EU governments in the future.

Furthermore, the refusal to use dollars and euros in settlements will lead to an outflow of foreign investors from the U.S. and European stock markets, a decline in arrangements for loans in Western banks, and a diminished reliance on Western rating agencies, insurance companies, and consulting firms.

Collectively, these factors will culminate in a seismic impact on the Western financial system, potentially leading to its collapse. The emergence of a BRICS single currency marks a paradigm shift, challenging the long-standing dominance of the U.S. dollar and the euro in global finance.

As the BRICS countries assert their financial independence, the implications for the Western world cannot be underestimated. The subsequent outflow of capital, withdrawal of foreign investors, and erosion of trust in Western financial institutions will reshape the global economic landscape.

The BRICS single currency represents not only a game-changer for the financial system but also a symbol of the growing influence and power of emerging economies. The world is witnessing a shift in economic dynamics, with the BRICS nations at the forefront of reshaping the global order.

As the Western financial system braces for the impact of dedollarization, it is essential for policymakers and stakeholders to adapt and prepare for a new era of financial multipolarity. The rise of the BRICS single currency is a testament to the changing dynamics of the global economy and a harbinger of a new financial landscape on the horizon.

In summary, the BRICS countries have expressed their long-term ambition to challenge the global dominance of the U.S. dollar by creating an alternative currency. While there are currently no immediate plans for a BRICS currency, the bloc is actively working to strengthen economic ties and increase trade in local currencies among its member nations.

The New Development Bank, established by the BRICS bloc, plays a crucial role in this strategy, aiming to expand its lending capability and support sustainable development projects. Although the path to creating a dollar rival is still distant, the BRICS countries are reshaping the global financial landscape and seeking a more multipolar and inclusive financial system. Their collective efforts signify a shift towards a more balanced and diversified global economy.