During a press conference in Beijing, U.S. Treasury Secretary Janet Yellen addressed concerns about the dominance of the U.S. dollar and its potential challenges posed by a proposed BRICS currency. Yellen stated that she remains confident in the continued dominance of the U.S. dollar in international transactions and dismissed the notion that any alternative, including the BRICS currency, could displace it in the foreseeable future.
While no official announcement has been made by the BRICS countries (Brazil, Russia, India, China, and South Africa) regarding a new currency, speculation has arisen after a Russian news outlet reported that Russia confirmed the launch of a gold-backed currency within the BRICS bloc.
Yellen reiterated her position on the matter, stating that the U.S. dollar will maintain its role as the primary facilitator of international transactions and a reserve currency in the coming years. She acknowledged that countries may have a motivation to seek alternatives due to the dollar’s role in implementing sanctions, but she stressed that data overwhelmingly supports the dollar’s usage in international transactions, reaching close to 90%. Yellen firmly stated that she does not believe any alternative has the potential to replace the dollar in the foreseeable future.
While reports suggested a confirmed launch of a gold-backed BRICS currency, Leslie Maasdorp, the vice president and CFO of the New Development Bank (BRICS Bank), stated that developing an alternative to the U.S. dollar is a medium to long-term ambition.
Yellen has previously defended the U.S. dollar, highlighting the reasons for its widespread usage in trade, including deep, liquid, open capital markets, a strong rule of law, and a wide range of financial instruments. However, she has also acknowledged that the use of financial sanctions over time could weaken the dollar’s dominance.
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Frequently Asked Questions (FAQs) about dominance
What is the proposed BRICS currency and how does it impact the U.S. dollar’s dominance?
The proposed BRICS currency refers to a potential common currency backed by gold, involving the BRICS countries (Brazil, Russia, India, China, and South Africa). While there have been reports about its launch, no official announcement has been made. U.S. Treasury Secretary Janet Yellen, however, has stated that she does not see the U.S. dollar’s dominance being threatened by this development or any other alternative. She emphasizes that the data overwhelmingly supports the U.S. dollar’s usage in international transactions, reaching close to 90%, and believes there is no alternative that could displace it for the foreseeable future.
How does Treasury Secretary Janet Yellen view the role of the U.S. dollar in international transactions?
Secretary Yellen maintains confidence in the U.S. dollar’s continued dominance in facilitating international transactions and serving as a reserve currency in the years ahead. She acknowledges that countries may seek alternatives due to the dollar’s role in implementing sanctions. However, she highlights that the dollar’s extensive usage, along with factors such as deep, liquid, open capital markets and a strong rule of law, contribute to its widespread acceptance in global trade.
Will the BRICS currency pose a significant challenge to the U.S. dollar?
Secretary Yellen does not believe that the proposed BRICS currency or any other development will significantly challenge the dominance of the U.S. dollar. She emphasizes that the data indicates the U.S. dollar is overwhelmingly used in international transactions, and she sees no alternative capable of displacing it in the foreseeable future. While there may be speculation and ambitions regarding alternative currencies, Yellen’s stance is that the U.S. dollar’s role as the primary facilitator of international transactions remains unthreatened.
More about dominance
- Janet Yellen: BRICS Currency Won’t Threaten US Dollar Dominance
- BRICS countries
- U.S. Department of the Treasury
- New Development Bank (BRICS Bank)
- The Role of the U.S. Dollar in International Transactions