Lately we have been getting more and more reports about the BRICS alliance being behind the scenes with a competitor for the US dollar. In a new article on Project Syndicate say Ana Palacio, a former vice president of the World Bank, said developing countries that feel left out are particularly attracted to this project.
According to her, they are looking for an alternative worldview and institutional system. They may find that in the new world currency that Russia and China, among others, are said to be working on.
Threat to the West?
Palacio has the strong feeling that many developing countries are realizing that the Western financial system has a limiting effect on their economic growth. “Developing countries are angry about the difficult conditions imposed on them by Western institutions. They are completely done with what they consider to be measure with two measures on key policy issues, such as the green transition,” said Palacio.
According to Palacio, developing countries are done with Western attempts to control their economies. They notice that they are not getting anywhere as a result and logically start looking for alternatives.
However, the question remains whether the alternative that the BRICS alliance is working on is a realistic option. It seems unlikely that the Western powers will agree to trade in a currency other than the US dollar, the euro or the Japanese yen.
Trust issue
Especially after the start of the war between Russia and Ukraine, this discussion has come up again. There have been rumors in the past about an initiative in this area from the BRICS countries, but that noise has never been louder.
It seems that the freezing of Russian reserves in the Western financial system was the last straw, at least for Russia. They no longer trust the Western financial system and China and other countries also seem shocked by America’s decision to exclude Russia.
After all, that is something that could also happen to them in the future if a conflict with the West arises. If these developments continue in this way, then it may just be that we will soon have a divided world.
On the one hand you have the West that mainly runs on the US dollar and on the other hand the BRICS alliance with their own new world currency. Bitcoin could be a nice connector in that world, but that’s all theory for now.