The idea really isn’t to replace USD with another country’s currency… It is to replace with a new supranational currency which is not beholden to any one country…
- There are articles of BRICS trying to create a new currency which is a composite of multiple national currencies of BRICS countries. BRICS countries would use this composite currency to settle trades and hold reserves.
- Argentina and Brazil wanted to create a supranational currency for south americas called Sur. The idea has not progressed much, due to economic issues.
The venerable John Maynard Keynes had proposed such a supranational currency called Bancor. This currency was the official UK proposal at Bretton Woods Conference 1944, but it was not accepted. Instead, a USD pegged to gold was accepted, making USD the currency for trade and thereby implicitly establishing USD as a reserve currency too.
Keynes’ Bancor was not meant to be a physical currency… It would not be held or traded by individuals. Instead, it is used in international trade for pricing and tracking assets/liabilities between countries.
His farsightedness is evident today. After Bretton Woods and many years of stability, US went on to unpeg the USD, run humongous deficits, print currency and thereby devalue it, sanction individuals/countries, freeze assets etc. As individuals/investors, we would still hold national currencies… But in international trade and country reserves, there is genuine effort to divorce from the dollar to some supranational currency.
How long USD remains relevant is anybody’s guess… People have been writing about this for many decades… For e.g., this is an article from 2013, making the case that USD decline is right around the corner
Slowly at first, then all at once | Sovereign Man
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