Russia’s Plan For The BRICS To Dismantle The Dollar System

Russia’s Plan For The BRICS To Dismantle The Dollar System

Yves here. Some financial markets commentators seem to be eagerly awaiting the dollar to collapse under the weight of the Fed’s monetary expansion. The wee problem with that view is that everyone knows that the party that trashes its currency gets a nice boost to its export sector, but it’s easy for this sort of behavior to devolve into “beggar thy neighbor” competitive devaluations (witness our recent finger-shaking at Japan). And since policy-makers in the major economies are deeply devoted to our current “free trade” system, the tacit assumption has been that we might see some jockeying within the current system, but no real breaks.
And the second major reason for the mainstream view that the dollar’s dominance is not at risk is that no other large economy wants the burden of serving as the reserve currency, which entails running trade deficits much of the time.
Nevertheless, a lot of countries resent the dollar hegemony. This post describes one effort to supplant it.
By Valentin Mândrăşescu, Editor of Reality Check @ The Voice of Russia. The article was edited by Wolf Richter and first published by Testosterone Pit.

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