BRICS Currency: Hope of Replacing the US Dollar Remains Wishful Thinking

In recent weeks, the talk of the BRICS nations developing their own currency has led to hope for its replacement of the US dollar. Moreover, as its annual summit is set to take place, the development of a BRICS currency to displace the US dollar will abound, but whether it bears fruit remains to be seen. While speculation about a BRICS currency challenging the USD swirls, the reality is far more complex. This USD remains the predominant global currency, but the BRICS coalition isn\'t backing down in its efforts to undermine the supremacy of the American dollar.

The ambition of BRICS (Brazil, Russia, India, China, and South Africa, and now expanded) to create an alternative currency to diminish reliance on the US dollar is understandable. Following its invasion of Ukraine, Russia has felt the sting of sanctions, accelerating its desire for alternatives. Given the recent expansion of the “BRICs” countries to include five new members, will the US dollar remain the world’s reserve currency? Many believe so, despite the BRICS nations\' ongoing efforts.

However, significant hurdles stand in the way of the BRICS currency becoming a viable contender to the US dollar\'s global dominance. Economic disparities between member states, lack of a unified monetary policy, and the absence of a robust financial infrastructure are major obstacles. Franklin Templeton analysts point out that a successful reserve currency requires deep, liquid financial markets, a stable political environment, and consistent adherence to international norms – qualities not consistently present across all BRICS nations.

Historical attempts to challenge the dollar\'s supremacy haven\'t fared well. The Euro, while a significant currency, hasn\'t dethroned the dollar as the world\'s reserve currency. The strength of the US economy, the depth of its financial markets, and the dollar\'s established role in international trade make it incredibly difficult to displace. Reserved IP rights and international agreements further solidify the dollar\'s position.

Furthermore, potential political ramifications are significant. U.S. President-elect Donald Trump has warned the BRICS countries that if they attempt to replace the “mighty U.S. dollar” they would face “100 percent tariffs and should [face other consequences]". While the likelihood of such extreme measures is debatable, it highlights the US\'s determination to maintain the dollar\'s global standing.

In conclusion, while the aspiration for a BRICS currency reflects a desire for greater economic independence and a challenge to the existing global financial order, the hope of replacing the US dollar in the near future remains wishful thinking. The structural and political challenges are simply too substantial to overcome in the short to medium term. The US dollar, for now, remains king.