BRIC Summit Sees End of Dominance of U.S. Dollar
Russian President Dmitry Medvedev, who hosted the BRIC summit, had told journalists prior to the meeting that present policies which maintain the role of the U.S. dollar as the world’s reserve currency ” have not managed to perform their functions.” Senior economic advisors from other BRIC nations, especially China, have also expressed the viewpoint that the status of the U.S. dollar as the only global reserve currency can no longer be unchallenged. It is therefore no surprise that the BRIC summit addressed the greenback in its official communique.
“We also believe there is a strong need for a stable, predictable and more diversified international monetary system,” the BRIC leadership tersely stated. Reading between the lines, the BRICs largely blame the United States for the global financial and economic crisis and believe that the malfeasance of U.S. fiscal and regulatory policies has abrogated the previously unchallenged status of the U.S. dollar as the standard reserve currency.
The BRIC has just held its first summit, and has emerged with a pointed gun aimed at the U.S. dollar. Not that this newly formed geopolitical bloc will immediately seek to diminish the U.S. dollar, considering in the short-term they themselves would be negatively affected, China in particular, which holds nearly a trillion dollars of U.S. dollar denominated Treasury bills. However, the handwriting is on the wall. With a growing perception among key economic players across the globe that the U.S. budget deficits are raging out of control and will inevitably spark high levels of inflation, this new power bloc is already planning for the day after the supremacy of the once might American greenback has been terminated.