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The latest summits between the BRICS countries — Brazil, Russia, India, China and South Africa — have relaunched the debate on whether we could possibly find a replacement to the US dollar as the global reserve currency. 

Brazil’s President Lula da Silva has repeatedly asked “why should every country have to be tied to the dollar for trade?” and “why can’t a bank like the BRICS bank have a currency to finance trade between Brazil and China, between Brazil and other BRICS countries?” 

Before him, in the 1960s, it was French President Charles de Gaulle who famously questioned America’s “exorbitant privilege,” seeking to convert France’s dollar reserves back into gold and thereby forcing President Richard Nixon to put an end to the gold standard that had characterized international trade since the Bretton Woods conference of 1944.

The dollar continued to dominate global trade nonetheless, as it had done since the close of World War II, when it replaced a fading British pound sterling. 

For most of human history, exchanges relied on currencies with intrinsic value, such as gold, silver or even salt. It is no coincidence that Austria’s 18th century silver Maria Theresa Thaler continues to be produced by the Austrian Mint, offering people the reassuring tie between currency and actual value. 

Nixon’s renunciation of the gold standard finally broke any illusion of such a link, declaring the US dollar the enduring king of world currencies. When an Egyptian farmer sells tomatoes in Cairo traffic and customers wonder why they are so expensive, the farmer cannot but answer that it is because of the dollar. In the meantime, the US is forced to continue borrowing and raising its debt ceiling beyond $33 trillion to maintain the privilege — or burden.

Instead of rejecting a bipolar Cold War framework, the BRICS grouping mostly rejects a US-centric worldview. That bid for greater political independence has now also become a bid for greater economic independence.

Hassan bin Youssef Yassin

What has made the global reserve currency debate, revived by recent BRICS summits, even more interesting is the announcement that six new countries will be joining the group in January, namely ����ֱ��, the UAE, Argentina, Iran, Egypt and Ethiopia. 

While the BRICS grouping already represented more than 40 percent of the world’s population before, the addition of these new members make the BRICS grouping a true Non-Aligned Movement for the 21st century. 

Instead of rejecting a bipolar Cold War framework, the BRICS grouping mostly rejects a US-centric worldview. That bid for greater political independence has now also become a bid for greater economic independence.

The euro has only grasped 20 percent of global foreign reserves and transactions, while foreign exchange reserves held in US dollars have fallen from 70 percent in 1999 to 58 percent in 2022. 

The US dollar still plays a role in 90 percent of foreign transactions, however. That reality has been changing recently between BRICS countries, who have favored transactions in yuan or in rupees between countries. 

While the euro, yuan and cryptocurrency have largely been ruled out today as serious contenders to replace the US dollar as global reserve currency — due to specific limitations — BRICS countries have evoked a basket of their five currencies as a contender not unlike the International Monetary Fund’s Special Drawing Rights, in this case backed by five powerful countries.

We can agree that today’s global economic order — or disorder depending on your point of view — carries specific weaknesses and interrogations, not least increased questioning of the US dollar as the global reserve currency. 

Given that a barrel of oil does not easily fit into a wallet, it will be crucial to watch these developments and see what gains or additional stability could be obtained from competing global reserve currencies. A serious analysis will allow us to assess our next move.

• Hassan bin Youssef Yassin worked with Saudi petroleum ministers Abdullah Tariki and Ahmed Zaki Yamani from 1959 to 1967. He led the Saudi Information Office in Washington from 1972 to 1981 and served with the Arab League observer delegation to the UN from 1981 to 1983.