By Bitcoin.com - 7 months ago - Reading Time: 2 minutes
BNY Mellon: US Dollar’s Global Reserve Status Safe Despite BRICS Expansion
The Bank of New York Mellon has provided insights into why the growth of the BRICS economic alliance is unlikely to impact the U.S. dollar’s dominance as the global reserve currency. “We think the most important factor for dollar use into the next decade revolves around technology instead,” said the investment bank’s analyst.
BNY Mellon on US Dollar’s Dominance
The Bank of New York Mellon Corp. (BNY Mellon) explained in a note, published Friday, that the U.S. dollar is unlikely to lose its global reserve currency status despite the expansion of the BRICS economic bloc. The leaders of the BRICS nations (Brazil, Russia, India, China, and South Africa) recently invited six nations — Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE) — to join the alliance as new members.
Bob Savage, head of market strategy at BNY Mellon, does not believe the expansion of the BRICS group is enough to dethrone the U.S. dollar. Noting that one of the BRICS objectives is to find an alternative to the USD, he wrote:
The USD is unlikely to lose its global reserve status anytime soon … new currency unions should look to technology or green baskets, rather than gold- or carbon-based ones.
During their recent summit, the BRICS leaders agreed to encourage the use of local currencies in international trade and financial transactions, thereby reducing reliance on the U.S. dollar.
According to BNY Mellon, the additions of Iran, the UAE, Egypt, and Saudi Arabia will make the new BRICS group a heavyweight in energy exports, particularly oil. This suggests that the economic bloc could introduce a commodity basket backed by gold and oil, the BNY Mellon analyst noted.
“The inclusion of the UAE and Saudi Arabia lift the per capita GDP and economic power, but likely conflicts with longer-term issues about the energy transition from carbon to sustainable sources,” Savage continued. Moreover, he emphasized:
We think the most important factor for dollar use into the next decade revolves around technology instead – specifically high-end computer chips.
Do you agree with BNY Mellon about the U.S. dollar’s dominance? Let us know in the comments section below.
Original source: Bitcoin.com