The United States had better act and had better act quickly; This is the message of the Group economic BRICS who agreed to unilaterally remove the dollar for its international trade pact.
The group will be now account for the international trade between them in their own currency, rather than the U.S. dollar; This means that they are free to set monetary policy which may affect only themselves and better account of their own national and international trade volumes.
The American dollar as reserve currency status means that countries are encouraged to take the dollar to buy the products and services that they need on the international market. Oil, for example, is a product that is bought and sold only in $ US, and most countries are now owners of dollars they can buy oil as needed.
With the dollar as a reserve has…
Allowed the Government to low-cost debt – when you cannot retain trillion dollar bills, the best thing is a hand full of US Treasury bills. Increased demand for US Treasury debt means low yields and a lower price of long term government spending.
A leading role in the world allowed the US -because the dollars are held by more people, businesses and Governments around the world that any other currency, the United States plays a role important in international trade and monetary setting for the world. If the cost to borrow a buck stops, it descends in the world, not only to the United States.
We given companies a competitive advantage -companies based in the United States who sell internationally find acceptance of the greenback in the world to be a boon for businesses. If you do business in any country, without worrying about the cost of insurance against the risk of forex, you have a natural advantage. This is BIG!
What you think of the dollar as reserve currency? Que are its days are numbered?
Business, economy, BRICs, Dollar, Forex reserve currency
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