Janet Yellen, the U.S. Treasury Secretary, recently defended the preeminence of the U.S. dollar, even as emerging nations make concerted efforts to move away from the dollar. Notably, Brazilian President Luiz Inácio Lula da Silva plans to highlight the de-dollarization issue at the forthcoming BRICS meeting. Yellen maintains that the widespread usage of the dollar in trade is well justified.
Yellen Upholds the Global Primacy of the U.S. Dollar
Speaking at a press conference in Paris, U.S. Treasury Secretary Janet Yellen upheld the international supremacy of the U.S. dollar. She was in the French capital attending a global finance summit convened by President Emmanuel Macron.
During the summit, Brazilian President Luiz Inácio Lula da Silva, along with South African President Cyril Ramaphosa, shared a panel discussion. President da Silva reiterated his proposal for nations to reject the U.S. dollar and instead engage in trade using their domestic currencies or other alternatives. He argued that the use of the USD in global trade negatively impacts countries like Brazil.
Responding to President da Silva’s appeal for de-dollarization, President Ramaphosa confirmed that the currency topic would be a key item on the BRICS meeting agenda. This meeting is set to be hosted by South Africa in August, according to the Financial Times. The BRICS bloc comprises Brazil, Russia, India, China, and South Africa.
Reacting to the push for de-dollarization by emerging nations, including Brazil, Yellen highlighted the difficulty of identifying a practical substitute for the U.S. dollar, given its long-standing prominence in global trade. The Treasury Secretary was quoted as saying:
Despite upholding the U.S. dollar, Yellen had admitted in April that overusing financial sanctions might potentially weaken the dollar’s supremacy. Earlier this month, she conceded that the ongoing trend of nations seeking an alternative reserve currency to compete with the U.S. dollar was to be expected. Additionally, she stressed that no nation, including China, could truly replicate the USD.
In the meantime, an increasing number of emerging markets, including members of the BRICS and the Association of Southeast Asian Nations (ASEAN), are intensifying their de-dollarization efforts. A proposal for a common currency among the BRICS nations is slated to be on the agenda for their summit in August.
Frequently Asked Questions (FAQs) about De-dollarization
Who is defending the dominance of the U.S. dollar?
U.S. Treasury Secretary Janet Yellen is defending the dominance of the U.S. dollar.
Why are emerging markets pushing for de-dollarization?
Emerging markets are pushing for de-dollarization because they believe the use of the U.S. dollar in international trade puts them at a disadvantage.
What is the stance of Brazilian President Luiz Inácio Lula da Silva on this issue?
Brazilian President Luiz Inácio Lula da Silva advocates for nations to abandon the U.S. dollar and trade in their own national currencies or other alternatives. He asserts that the use of the USD in global trade negatively impacts countries like Brazil.
BRICS is an economic bloc comprising Brazil, Russia, India, China, and South Africa. The issue of de-dollarization is set to be a key item on the BRICS meeting agenda hosted by South Africa. BRICS nations are among those pushing for de-dollarization.
What did Janet Yellen say about the potential of financial sanctions undermining the U.S. dollar’s dominance?
Janet Yellen admitted that the overuse of financial sanctions could potentially weaken the U.S. dollar’s supremacy. She also said the trend of nations seeking an alternative reserve currency to rival the U.S. dollar was expected.
More about De-dollarization
- Janet Yellen’s Official Profile at the U.S. Department of the Treasury
- Understanding De-Dollarization
- What is the BRICS Group?
- Dollar Dominance in Global Trade
- Association of Southeast Asian Nations (ASEAN) and Economic Integration
- The Role of U.S. Financial Sanctions