Bank of America Shuns BRICS, Yuan, and Crypto as Competitors to Bitcoin as the Future Global Currency
- A Morgan Stanley veteran noted that USD is losing its sheen as a reserve currency as many countries accumulate Gold rapidly.
- While the BRICS and China are working on their own CBDCs, BoA believes that it’s too early to challenge USD’s dominating position in the global financial system.
The dominance of the US dollar as the world’s reserve currency is currently under threat as several central banks of major economies are looking at a way around the USD. Former Morgan Stanley executive and investment veteran Ruchir Sharma recently shared his thoughts on the developments in the global financial system.
During his interview with France24, Sharma said that America’s biggest economic rivals have been exploring ways to transact with each other without using the USD. This trend has particularly accelerated after Russia’s invasion of Ukraine last year and the Western sanctions on Russia. Sharma stated:
You have Saudi Arabia and China talking, they trade in oil. [They’re determining] how to do it in a way where the US dollar is not used and they can settle their payments in each other’s currency. You have India talking in a similar way with the UAE, which is that how do you cut the dollar out as a denominator.
Moving to Gold for Reserves
Sharma, who’s also the founder of Rockefeller International explained that major economies have also started building up their foreign exchange reserves in currencies other than the USD. Also, they have been accumulating Gold at a rapid rate. He added:
Most central banks tend to hold foreign exchange reserves in other currencies, predominantly the US dollar. But over the last year or so, what they have done is that they have been diversifying and buying gold in a very big way. The central bank holdings of gold are increasing at [nearly]the sharpest pace that we have seen in history.
So central banks from Brazil, to India, to China, Turkey, all these central banks are buying gold in a very big way, and instead of holding their foreign exchange reserves in the US dollar, they’re holding it increasingly in gold. And therefore the price of gold has surged so sharply over the last few months.
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No Currency Can Compete With the US Dollars
In the recent economic war, China has made an attempt to push trade with other countries in its native currencies like the Chinese Yuan. However, analysts at Bank of America believe that transition is easier said than done and neither the BRICS currency nor the Chinese Yuan could surpass the dominance o USD anytime soon.
On the other hand, the purchasing power of the Dollar has been dropping and Americans have been feeling the heat of the same with the rising inflation. Bitcoin’s biggest proponent Michael Saylor once suggested that The US government should back USD with Bitcoins to maintain the USD’s position as the reserve currency of the world.
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