BRICS: Dedollarization, a big farce?

Dedollarization, a recurring concept in economic discussions, sparks lively debate. While some see this BRICS-led movement as an imminent threat to the dominance of the US dollar, leading experts dismiss the idea as unfounded. This article explores why the idea of ​​dedollarization is considered a “big joke” according to some experts.

BRICS dedollarization movement: Jeffery Christian's position

Jeffery Christian, a leading expert on the gold and silver markets, recently called dedollarization a “myth, joke and nonsense.” According to him, the US dollar continues to dominate international trade, accounting for 88% of global transactions. The expert explains that the stability and liquidity of the dollar make it a preferred currency for global transactions. He points out that, despite growing discussions around the concept of dedollarization, the whole world uses American currency and “no one is throwing money away.”

Jeffery Christian clarifies that although there has been diversification of central banks' foreign currency holdings, this “has not been to the detriment of the dollar, and it is not moving away from the dollar.” He supports his arguments with data showing that dollar transactions remain widely preferred due to the confidence they inspire among investors and governments. Attempts to diversify into other currencies, such as the yuan or cryptocurrencies, have not reached a significant level to challenge the supremacy of the dollar according to him.

Morgan Stanley experts get involved

James Lord of Morgan Stanley shares a similar analysis to that of Jeffery Christian. According to him, the concept of dedollarization, often associated with the rise of cryptocurrencies like bitcoin, is largely overestimated. The US dollar is unbeatable and is destined to remain the dominant currency for the long term. The expert emphasizes that, during periods of recession or fall in global stock markets, investors prefer to turn to the dollar due to its historical stability. This preference for the dollar further strengthens its central position in the global economy.

Furthermore, Lord reiterates that the dollar's competitors, such as the yuan and bitcoin, are not robust enough to compete with its supremacy. He mentions that the volatility of cryptocurrencies limits their usefulness as a stable store of value. For example, a cryptocurrency that rapidly increases in value is often held for appreciation rather than for everyday transactions. Morgan Stanley's David Adams points out that the best outcome for a dominant currency is stability, a characteristic the dollar continues to demonstrate.

Experts therefore believe that the dollar will maintain its position of strength. According to these specialists, despite discussions on dedollarization and despite multiple BRICS initiatives, the dollar remains and will remain the dominant currency in the long term, thanks to its stability and historical reliability.