The U.S. dollar has long enjoyed its coveted position as the premier currency worldwide. However, with a growing roster of international economic power players in the race, other nations are jockeying to dethrone the current title holder and replace it with something more conducive to furthering their own interests. While the trend certainly bears watching, visionary financial mastermind Jack Truong — who, over the course of his CEO career, transformed a trio of global corporations into market titans — sees the U.S. dollar not as a horse ready to be put out to pasture, but rather, one very much still in the running and a force to be reckoned with.
With the goal of establishing a new, more amenable non-U.S.-based reserve currency, the first BRIC summit convened in Yekaterinburg, Russia, in 2009. The nations in attendance included Brazil, Russia, India, and China. When South Africa joined the league the following year, the group became collectively recognized as BRICS. In January 2024, membership expanded to include Iran, Saudi Arabia, the United Arab Emirates, Egypt, and Ethiopia.
As explained in an Investing News Network feature updated July 8, 2024: “The potential BRICS currency would allow these nations to assert their economic independence while competing with the existing international financial system. The current system is dominated by the U.S. dollar, which accounts for about 90% of all currency trading.”
Why Jack Truong Says the U.S. Dollar Continues To Offer More Bang for the Global Buck
According to Jack Truong, the formidable strength of the U.S. dollar lies in “its network, liquidity, and universal acceptance [which] are fruits of systematic cultivation over decades.” Thanks to its international ubiquity, a firmly entrenched organizational structure, and the intricately constructed global financial architecture it anchors, Truong says the U.S. dollar is responsible for powering a complex nexus of what he terms “seamless transactions worldwide.”
While it would be shortsighted to ignore shifting dynamics in the global economic landscape, Truong insists that based on its position as a leading holder of gold bullion worldwide, the demise of the U.S. dollar in favor of a competing currency remains highly unlikely. “Despite substantial backing, the likelihood of [the BRICS] initiative posing a serious threat to U.S. dollar supremacy is minimal due to the integral role of the USD in global finance, the comparative stability of the U.S., and the lack of cohesion within the BRICS consortium,” he asserted.
Is BRICS Making Headway on Its ‘De-Dollarization’ Agenda?
Concerted efforts by the BRICS bloc toward lessening global dependence on U.S. currency have actually seen some traction of late. Flaring geopolitical tensions between the U.S., Russia, and China are currently fueling the momentum.
“Until recently, nearly 100% of oil trading was conducted in U.S. dollars; however, in 2023, one-fifth of oil trades were reportedly made using non-U.S. dollar currencies,” Investing Network News reported. “Central to this ongoing situation is the U.S. trade war with China, as well as U.S. sanctions on China and Russia.” The report concludes that were the BRICS nations to launch a new reserve currency, declining demand for the U.S. dollar — known in financial parlance as de-dollarization — could have profound economic repercussions both in the U.S. and abroad.
In addition to their economic agenda, BRICS nations have been making concerted pushbacks against America’s traditional interventions in world affairs, with demonstrable results. “The BRICS group has been challenging some key tenets of U.S. global leadership in recent years,” noted authors Mihaela Papa, Frank O’Donnell, and Zhen Han in an Aug. 18, 2023, feature in the nonprofit academic-based news site The Conversation. “On the diplomatic front, it has undermined the White House’s strategy on Ukraine by countering the Western use of sanctions on Russia. Economically, it has sought to chip away at U.S. dominance by weakening the dollar’s role as the world’s default currency.”
BRICS Currency’s Current Failure To Launch
Even so, Jack Truong suggests that the BRICS consortium faces a number of roadblocks in their efforts to elevate another currency above the U.S. dollar. He cites a complex tangle of both internal and external variables that have thus far prevented BRICS from bringing a viable new currency to the table. He posits that economic instability, when combined with authoritarian agendas and shifting alliances, isn’t likely to produce a winning formula for any currency hoping to compete against the dollar’s long-established reputation for widespread acceptance and integrity.
“Successfully creating a BRICS alternative to the U.S. dollar requires navigating these internal disparities, global trust deficits, and the unpredictability of opaque regimes — [which would be] no easy feat,” says Truong.
Last year, the BBC reported that while Brazilian and Russian leaders have actively floated the creation of a BRICS currency to compete with the U.S. dollar, the subject wasn’t brought up for discussion at the group’s 2023 summit. “It would be impractical for BRICS nations to create a common currency because their economies are so different,” interviewee Padraig Carmody, professor at Trinity College Dublin (whose research focus is the political economy of globalization in Africa), was quoted as saying.
Why U.S. Policymakers Need to Gear Up for the Future
Although he considers the introduction of a BRICS currency premature, Carmody suggested “they may consider in the future creating some new currency to be used for international trade payments, or a cryptocurrency for international trade.” While such an effort is still only in the planning stages, to ignore this and other BRICS initiatives would be a mistake. The United States cannot afford to keep its head in the sand, hoping the dollar’s status quo will remain intact, especially now with another BRICS expansion on the horizon and 20-some nations potentially hoping to join its ranks.
“To date, U.S. policy has largely ignored BRICS as an entity … Designing a BRICS-focused foreign policy is an opportunity for the United States to innovate around addressing development needs,” Papa, O’Donnell, and Han pointed out. “Rather than dividing countries into friendly democracies and others.”
Adapting U.S. economic policy to align with evolving geopolitical realities is a challenge Jack Truong believes America can’t afford to fail. “The true test for the USD lies not in an external source like the BRICS initiative, but rather from the internal challenges of achieving governmental cohesion and policy effectiveness,” he warns. “Overcoming these domestic issues is crucial to maintaining the USD’s status as the dominant currency in global trade.”
