In unison, several analysts announced the end of the hegemony of the American dollar. Although recent geopolitical alliances seem to confirm the deal, is it true? Here is what an economist and a political scientist think about the issue.
End of the dollar: exaggerated speculation?
At the beginning of April, the American columnist Carlson Tucker predicted the end of the dollar. A prophecy that seems to be confirmed by the latest geopolitical turmoil within the BRICS. However, however likely it may seem, some specialists do not believe it. This is the case of the American political scientist Ian Bremmer. For him, this information, which is making headlines in the media, is greatly exaggerated and must be taken with a grain of salt.
The expert does not dispute the trends around the dollar and its potential demise. However, the greenback is not called into question according to him. The reasons: the dollar still ticks all the boxes of what makes a currency viable. These include stability, liquidity, security and convertibility.
Logically, a question arises: until when will the dollar remain viable in international transactions? To the latter, the economist replies: “That’s not to say the dollar advantage can’t fade, of course. After all, all the reserve currencies that preceded the dollar were dominant until they ceased to be so”.
Wouldn’t this be an admission that the American currency may be shelling out the last moments of its glorious cycle? For the economist Paul Krugman, who also does not believe in the end of the dollar, other favorable arguments exist.
The dollar still has other cards to play
According to Krugman, the presence of the US dollar in international transactions “seems pretty safe”. And the currency should, according to him, maintain its presence on the global financial scene. Three arguments would favor this maintenance.
“The first is his seniority. Since everyone is already using the dollar, it would take exceptional circumstances to induce them to change,” explains the expert. And to add: “The second is that US financial markets are open. Unlike China, we do not impose controls on people trying to bring money into or out of the country. The third is the rule of law”.
Unless you are in denial, wouldn’t it be exceptional for the BRICS countries to set up a common currency?
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