From the history books
- At the Bretton Woods conference of July 1944, delegates from 44 Allied countries agreed that the world’s currencies would no longer be linked to gold but pegged to the U.S dollar.
- As of 2023, the U.S dollar made up 54% of the global FX reserves.
- After the 2008 Global Financial Crisis, some nations began considering alternatives to the U.S. dollar due to the economic impacts associated with its performance.
Can the U.S dollar be challenged?
- Brazil, Russia, India, China, and South Africa, joined forces from 2006 to form the BRICS group.
- Although not initially established to challenge the US Dollar, the BRICS’ initiatives suggest a strategic effort to reduce reliance on the Dollar and promote a more balanced global financial system.
- According to the IMF, BRICS countries’ share of global GDP, assuming purchasing power parity, went from 16.5% in 1995 to 32.1% in 2023.
- The Chinese yuan’s percentage share of total international payments via SWIFT tripled between 2019 to 2024, now at 3%.
- There is even talk of a potential BRICS currency.
Growing importance of the CNY and ZAR
