BRICS Currency and CBDC Development

Amidst the broader de-dollarisation trend within the BRICS bloc and the ongoing digitisation of financial systems globally, there's a significant movement towards Central Bank Digital Currencies (CBDCs). This shift, involving 130 nations, poses a potential risk to the dominance of the US dollar. Notably, the imminent creation of a BRICS currency adds to the mounting pressure facing the greenback.

Implications of CBDC Developments

The ongoing developments throughout 2023 highlight the emerging challenge poised by the BRICS alliance against the US dollar. Beyond the geopolitical implications of the BRICS' de-dollarisation plans, 130 nations are actively progressing towards CBDC implementation. The concurrent pursuit of a BRICS currency further fuels speculations about a potential digital asset as a unilateral instrument.

Acceleration Towards CBDC Adoption

Statistics from an Official Monetary and Financial Institutions Forum (OMFIF) survey reveal that 41% of Central Banks anticipate having fully operational CBDCs by 2028. This swift progression could expedite the global prevalence of digital currencies, potentially incentivising nations to favour local currencies over the US dollar in international transactions.

Threat to Dollar Dominance

With over 11 nations already piloting their CBDCs and the successful introduction of the digital yuan, alternatives to the US dollar in global transactions are gaining traction. The burgeoning popularity of these currency options poses a credible threat to the dollar's supremacy in international settlements.

Concerns for the US Dollar

Looking ahead to 2024, the US dollar faces a pivotal year as de-dollarisation efforts persist within the global south. Furthermore, the adoption of these initiatives by traditional US allies like Saudi Arabia and the UAE could inflict lasting damage on the dollar's standing.

The Evolving Landscape

As the world moves towards CBDCs and the potential introduction of a BRICS currency, the influence of the US dollar faces a real challenge. The ongoing trends underscore a global shift in financial dynamics, prompting the need for the US to adapt its monetary strategies to navigate this evolving landscape.