BRICS vs. US Dollar Sparks Surge in Privacy Coins

• The recent reports that BRICS have agreed to replace the USD with a common currency for trade have called for the need for the US to mitigate the effect. 

• While many expected the US to use CBDC to take on the BRICS, U.S. Federal Reserve Governor Michelle Bowman believes there is no need. 

A recent BRICS summit in South Africa re-emphasized the decision to end the US Dollar dominance by the introduction of another currency. According to an excerpt from the recent meeting, the member countries would trade among themselves in their local currencies as an initial step to replace the USD.

Over the years, the US has gained significant benefits from the use of its currency as the world’s principal reserve currency. Some experts have admitted that the successful replacement of the USD could affect several key areas of the US economy. However, others argue that the development of a Central Bank Digital Currency (CBDC) could offset this impact and sustain its strength. 

As of the time of writing, almost all the central banks across the globe are planning to enter into this new financial era with 98 percent of the world considering a CBDC. According to data, 130 nations out of the 198 recognized countries are launching pilot test runs. Despite the threat of de-dollarization, the US has shown little interest in turning the dollar into CBDC. For now, this possibility is still under discussion, and subject to compelling arguments that can force a decision. 

According to U.S. Federal Reserve Governor Michelle Bowman, the benefits of CBDC cannot be clearly defined, and it is uncertain whether the country must embrace it. 

The potential benefits of a U.S. CBDC remain unclear, and the introduction of a U.S. CBDC could pose significant risks and tradeoffs for the financial system.

More on the Bowman’s Argument Against CBDC Implementation

According to her, the central bank has already launched FedNow. To her, the other proposed solutions may address some or all the challenges expected to be addressed by the CBDC. 

Fed Chairman Jerome Powell has also explained that the White House and Congress would have to sign off and authorize before the central bank makes a move. 

Bowman spoke about the CBDCs:

We have seen a range of arguments in the public debate about issuing a CBDC, including addressing frictions within the payment system, promoting financial inclusion, and providing the public with access to safe central bank money. I have yet to see a compelling argument that a U.S. CBDC could solve any of these problems more effectively or efficiently than alternatives, or with fewer downside risks for consumers and the economy.

It is important to note that Powell has called on the need to conduct more research into CBDCs while the central bank monitors its development. This implies that the US would not, in the meantime, resort to this project as a tool to fight the de-dollarization initiative by the BRICS. 

The need for the BRICS to adopt one common currency for their trade has led to a series of campaigns from crypto enthusiasts who believe that Bitcoin and other privacy coins like Monero, Dash, and ZCash, could be a perfect candidate. As of press time, these assets were enjoying an interesting price surge with Monero, Dash, and ZCash up by 1.67 percent, 2.8 percent, and 2 percent respectively in the last 24 hours. 

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