The Truth About Global Currencies: Debunking Misconceptions and Conspiracies

The idea that the United States dollar is on the brink of losing its status as the global currency has been a persistent narrative for some time now.

Vocal supporters of this theory are finding confirmation for example in the movement of Dubai, Singapore, or Malta banks towards the RMB … but this is dictated by the specificity of these banks or more like their customer base — so the trend is visible and true, but you have to look at the whole picture…

So let’s catch some boarder perspective!

The dollar going out is kind of a flawed idea that is based on a misunderstanding of the role of the global currency in the world economy. The truth is that the global currency does not confer power onto a country; instead, it is a reflection of a country’s power and influence in the global economy.

From a strategic point of view, the US position is secure, and there is no danger to its status as the global currency. However, from an economic perspective, the US dollar is subject to the whims of the global economy. There is a belief that other countries will simply stop using the US dollar and move on to other currencies. This belief is based on the assumption that other currencies, such as the Chinese yuan or the Russian ruble, are viable alternatives to the US dollar. However, this assumption is incorrect.

The US dollar remains the world’s dominant currency due to its global reach and stability. Despite periodic claims that the dollar’s status is threatened, no other currency has come close to replacing it. The notion that a jointly managed currency launched through the International Monetary Fund’s secure deposits could replace the dollar is also misguided. While these secure deposits, known as SDFs, facilitate the flow of money into the IMF, they are not a currency and do not function as a unit of exchange. Some have suggested that countries could turn to alternative currencies like the Chinese yuan or Russian ruble, but these options lack the stability and global reach of the dollar. Ultimately, the US Navy’s military might and the dollar’s role in facilitating global trade ensure that the US dollar will remain the world’s dominant currency for the foreseeable future.

As the world remains interconnected, there has been much talk of countries abandoning the US dollar and seeking new alliances. However, the idea that countries such as South Africa, Argentina, or Saudi Arabia could join the BRICS group and abandon the US dollar is again vastly misguided.

The BRICS is something that deserves some more exploration than the points above.

The group was created in 2006 to facilitate trade between four large developing economies: Brazil, Russia, India, and China. Together, these countries represent nearly half of the world’s population and account for over 20% of global GDP. The idea behind the BRICS group was to create a new alliance that would challenge the traditional dominance of the West, and provide a counterbalance to the US dollar.

While the leaders of these countries may meet from time to time to discuss policy, the reality is that there is no real trading between these countries. Brazil, Russia, India, and China all have their own unique economic systems and face their own set of challenges. For example, Brazil is a major exporter of agricultural products, while Russia relies heavily on oil and gas exports. India is a major exporter of IT services, while China is the world’s largest exporter of manufactured goods.

Given these differences, it is unlikely that there will be significant trading between these countries anytime soon. Moreover, the idea that South Africa, Argentina, or Saudi Arabia could join the BRICS group and abandon the US dollar is also unlikely. While these countries may share some similarities with the original members of the BRICS group, they have again their own unique economic and political systems that would make it difficult for them to join the group.

For example, South Africa is a relatively small economy compared to the other members of the BRICS group, and it faces its own set of challenges, including high levels of inequality and unemployment. Similarly, Argentina has a long history of economic instability, while Saudi Arabia is heavily dependent on oil exports. While these countries may be interested in joining the BRICS group, it is unlikely that they will be able to do so in the near future.

The idea of countries abandoning the US dollar and seeking new alliances may sound appealing, but the reality is that this is doubtful to happen anytime soon. The BRICS group was created to facilitate trade between four large developing economies: Brazil, Russia, India, and China. While these countries may meet from time to time to discuss policy, there is no real trading between them.

The truth is that the US dollar is the global currency because it is the most stable and widely accepted currency in the world. While there may be some rumblings about other countries abandoning the US dollar, there is no real alternative to the US dollar as the global currency. This is because no other country has the economic and military power to impose a tax on the trading system and ensure the smooth functioning of the global economy.

To sum that all up, the idea that the US is on the verge of losing its status as the global currency is based on a flawed understanding of the role of the global currency in the global economy.

The US dollar is the global currency because it reflects the economic power of the United States, and there is no real alternative to the US dollar as the global currency. While other countries may talk about abandoning the US dollar, the reality is that the US dollar is here to stay. But… in the deindustrialized economy of the future RNB may have its place as the specific currency of industry (or part of it) or in bilateral engagement on a more political than economic level.