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News India Live, Digital Desk: For a long time, the US dollar has dominated the world’s trade and economy. But now something is changing. Some of the most powerful countries in the world, including India and China, are challenging this ‘dollar rule’. At the center of this discussion, two words are being heard again and again – ‘BRICS’ and ‘de-dollarization’. Let us understand in simple language what is happening and what effect it can have on us.
First of all, what is this de-dollarization?
De-dollarization simply means reducing the dependence on the US dollar in global trade and financial transactions. Till now, most of the countries in the world use dollars to trade with each other. Whether buying oil or any other commodity, the price is paid in dollars only. Because of this, America has considerable control over the world economy. Many countries, especially Russia and China, are not happy with this power of America. He believes that America uses this power to impose sanctions on other countries and impose its policies.
So what is BRICS doing in this?
BRICS (Brazil, Russia, India, China and South Africa) is a powerful grouping of the world’s emerging economies. These countries together account for about 45% of the world’s population and also have a large share in global GDP. These countries are now emphasizing on promoting mutual trade in their own currencies.
Imagine, if India can buy oil from Russia in rupees and trade with China, Brazil in its yuan, then the need for dollars will automatically reduce. For this, BRICS countries are also working on their own payment system like ‘BRICS Pay’, which can become an alternative to the US controlled SWIFT system.
China’s Digital Yuan: A Big Game-Changer?
China’s digital yuan (also known as e-CNY) could prove to be a trump card in this whole story. China is among the first major countries in the world to launch its official digital currency. It is not a cryptocurrency, but a digital currency issued by the Central Bank of China.
Its biggest advantage is that America will not have an eye on the transactions done through digital yuan. It can be faster, cheaper and directly between two countries, thereby bypassing the SWIFT system. China is promoting it in its trading partner countries, thereby posing a direct challenge to the dominance of the dollar.
Where does India stand in all this?
India’s stance in this matter is very firm and strategic. India is also a supporter of de-dollarization and wants to promote trade in its national currency. Oil trade with Russia in rupee terms is a great example of this.
However, India is not in favor of being completely dependent on any one currency, such as the Chinese Yuan. India wants a system where multiple currencies can work together, so that no one country dominates. Recently, there were reports of Indian oil refineries paying in Chinese Yuan for Russian oil, which shows that India is taking pragmatic steps keeping in mind its national interests.
So will the reign of the dollar really end?
Not so fast. The dollar is still the world’s largest reserve currency and it is not easy to replace it. But it is true that change has begun. The efforts of the BRICS countries and initiatives like China’s digital yuan are clearly indicating that the world is now moving from a unipolar financial system to a multipolar system. The throne of the dollar is no longer as strong as it used to be and the times to come may witness major changes in the global economy.
