BRICS
The global financial landscape is experiencing a significant shift as central banks from many developing countries increasingly diversify their reserve allocations away from the U.S. dollar.
This movement is driven by concerns over the potential economic impact of the United States’ substantial $35 trillion debt.
Such a massive debt load could have dire consequences for the U.S. economy, especially if markets were to crash or if the country were to enter a recession.
In response, BRICS nations—Brazil, Russia, India, China, and South Africa—are at the forefront of this trend, actively reducing their reliance on the U.S. dollar and promoting the use of local currencies.
As a result, the share of the U.S. dollar in global reserves has been steadily declining. According to a recent report by the Atlantic Council, the U.S. dollar’s share of global reserves has fallen to 59% in 2024.
This marks a significant decrease from 72% in 2002. Over the past two decades, the dollar’s dominance in global reserves has diminished by 13%, reflecting a broader trend among developing countries to move away from the currency.
During the same period, China’s local currency, the yuan, has seen a notable increase, rising by 3%.
In addition to the decline in the U.S. dollar’s share, the Euro has also experienced a reduction in its global reserve status. From 28% in 2008, the Euro has decreased by 9% over the past 16 years, now standing at 19%.
Maria Zakharova, Spokeswoman for Russia’s Ministry of Foreign Affairs, highlighted the Euro’s significant drop and noted that the yuan’s share has grown threefold since 2016.
BRICS countries are actively promoting the use of local currencies for international transactions, which adds further pressure on the U.S. dollar.
This de-dollarization trend is likely to continue, with projections suggesting that the U.S. dollar’s share of global reserves could potentially fall below 50% in the coming decades.
Such a development could have severe repercussions for the U.S. economy, potentially leading to financial instability and significant stock market declines.
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