An international powerhouse refers to a country or organization with significant global influence and power. The international monetary system involves institutions like the IMF and World Bank, which regulate global currency exchange and provide financial assistance to nations. Reforms in the system have been discussed, but no major changes have been implemented as of my knowledge cutoff in September 2021.
The scary meeting between Xi Jinping and Putin in Russia
On the momentous day of March 20, 2023, Beijing and Moscow solidified their partnership in an extraordinary meeting between Presidents Xi Jinping and Putin at the magnificent Kremlin. As they tackled various pressing issues, ranging from Ukraine's war situation to the intricate global economy, the synergy between China and Russia captured the world's attention.
This high-octane rendezvous in Moscow was a strategic move by China to bolster its alliance with Russia amidst the tumultuous Ukraine crisis. Unwilling to censure Russia's infiltration of Ukraine, China instead pointed its finger at the United States and NATO as culprits.
The two charismatic leaders released a powerful joint statement, underlining their steadfast commitment to their "no-limits" friendship. They advocated for a just and unbiased international order while denouncing United States' "hegemonic behavior".
This riveting summit between Xi and Putin sent waves through the international community, highlighting China's increasing audacity in contesting the United States' global supremacy. The meeting also fueled concerns over China's potential military or financial support to Russia in its ongoing battle against Ukraine. This meeting clearly states the truth to the world that the power house of United states is going to be tested in the coming years.
De dollarization in process:
In2001 73% of global trade took place in dollar and in 2023 58% of global trade is in dollar.
De dollarization is an intriguing phenomenon that involves reducing the reliance on the US dollar in global trade and finance. The powerhouse nations of BRICS (Brazil, Russia, India, China, and South Africa) have joined forces in their quest to propel this movement.
You may be wondering why these influential countries are so keen on de dollarization. Well, there are several compelling reasons. To begin with, the omnipresence of the US dollar – being the world's reserve currency – grants tremendous power to the United States over the international economy. The ripple effect of this advantage is that the US can impose crippling economic sanctions on unfavored nations, leaving lasting damages on their economies. Moreover, the US dollar's status as the most volatile currency adds a layer of uncertainty for businesses and investors alike. BRICS countries argue that a stable international currency would create a more solid foundation for worldwide economic growth.
Their concern doesn't stop there; rising unease over America's economic sanctions is also on their radar. Countries like Iran, Russia, and Venezuela have been hit hard by such measures in recent years. The BRICS nations consider the sensations unjust and detrimental to progress. To tackle this issue head-on, BRICS countries have taken several bold strides toward de dollarization. The formation of the BRICS Contingent Reserve Arrangement (CRA) in 2014demonstrates one such initiative; a monetary safety net designed to minimize their dependence on US dollars as reserves.
Additionally, they're working diligently to conceive alternative payment systems independent of the US dollar. China's Cross-Border Interbank Payment System (CIPS),facilitating yuan settlement for banks, exemplifies such development. Eradicating the US dollar's position as the world's reserve currency is no easy feat for BRICS countries; yet incremental progress has garnered attention. Should the sensations prevail, global economic implications will undoubtedly be monumental.
BRICS to BRICS+ in process
Proposed BRICS expansion
The revolution from BRICS to BRICS+ holds significant implications as these nations prepare to launch a new reserve currency in the future. This exciting transformation will offer improved stability, with the potential to increase the current influence of BRICS countries on the world stage, encompassing 40%of the global population and 50% of the global GDP. This shift will also play a crucial role in advancing de dollarization efforts. With French President Macron expressing his eagerness to attend the forthcoming BRICS summit in South Africa, it signifies a massive turning point on the global chessboard. The time is approaching when the dominance of the United States may be challenged by this burgeoning BRICS+ currency alliance.