US Dollar's 20-Year Fall Continues: BRICS and the Crypto Revolution

• US Dollar Continues 20-year Decline Amid BRICS De-dollarization Efforts
• BRICS Bloc Propels US Dollar's Decline as Global Reserve Currency
• Global Central Banks Still Hold Significant US Dollar-Denominated Assets
• Other Currencies Gaining Ground
• Impact of BRICS' Policies

US Dollar Continues 20-year Decline Amid BRICS De-dollarization Efforts

The US Dollar has persistently faced a downturn over the past two decades, significantly influenced by the de-dollarization initiatives of the BRICS nations. This evolution has fundamentally questioned the dollar's position as a global reserve currency. The ever-increasing global sentiment aims to reduce international dependency on the dollar. This concept has only amplified what has been a protracted downturn for the US currency, with potential acceleration looming in the year ahead.

As the BRICS alliance persistently encourages local currency settlements and potential native currencies, nations are gradually exploring alternatives to the dollar for international transactions.

BRICS Bloc Propels US Dollar's Decline as Global Reserve Currency

In 2023, the BRICS bloc attracted considerable attention for its numerous actions, including its first expansion initiative. This initiative culminated in the addition of five new nations to the bloc, a change that officially took effect on January 1st, 2024. Following this expansion, the bloc's de-dollarization efforts gained momentum throughout the year.

As per the data from Wolf Street, the initiatives by BRICS have contributed to the US Dollar's 20-year dip, reflecting a global shift in outlook. The data specifically shows a decrease in US dollar-denominated foreign exchange reserves to 59.2%. This decline is expected to continue.

Global Central Banks Still Hold Significant US Dollar-Denominated Assets

Despite the decline, central banks worldwide still hold a significant $6.5 trillion in total US dollar-denominated assets. This holding appears to be more of a necessity as the global reserve share has reduced from 66% in 2014 to its current rate. The data reveals the dollar losing terrain to an array of smaller currencies gaining traction globally.

Other Currencies Gaining Ground

The Euro currently constitutes 19.6% of the global reserve, while the Japanese Yen and the British Pound account for 5.5% and 4.8% respectively. After these, all other smaller currencies collectively represent around 3.9% of the share, outpacing the Chinese yuan and the Australian dollar.

Impact of BRICS' Policies

These developments serve as a testament to the effectiveness of BRICS' efforts. The economic alliance has been striving to augment local currency usage. As a result, the currencies of the smaller nations in the global south have begun to grow in prominence. This growth could lead to continued geopolitical ramifications in the form of evolving multipolar viewpoints, further encouraging the gradual decline of the US dollar.

Edited by Jonathan Stoker