Dedollarization is happening at a steady rate within BRICS and in the global economy, although more work needs to be done to accelerate the process, Michael Goddard, the president of the Netley Group, told Sputnik.
“It will be amazing if BRICS can come up with some gold-backed trading currency. The dedollarization is happening fast. Over the last 20 years, you see the share of global payments in the dollar has gone down at a steady rate. This is getting even faster now,” Goddard said.
At the same time, to “truly dedollarize,” several aspects should be taken into account, he added.
“One is the trade aspect, a currency to trade in. So that’s the easier part of this whole equation. For example, if BRICS can get together and somewhat back the currency maybe with gold reserves of Russia, China, India, whoever, you could come up with a trade currency, sort of the currency that you have in your pocket to spend, but this will be an electronic currency for trade. Then you can very quickly get a significant share of global trade done in that currency,” Goddard stated.
“The harder part” in efforts to replace the dollar lies in the reserve aspect of the currency, the Netley Group president noted. For instance, the United States’ big advantage at the moment is the breadth of its bond market, Goddard explained.
“One of the ways, I think, BRICS could develop something to compete with that would be the technology to actually link the BRICS bond markets,” the entrepreneur added.
“So, if you could create a somewhat gold-backed BRICS currency and, at the same time, link the bond markets of all of the BRICS countries and other friendly countries to BRICS via technology, you can then create a global bond market of incredible depth.”
Combining these two things — a stable trade currency and a strong joint bond market — could create the potential to eventually displace the dollar, Goddard also stated. This process could be even sped up with the enlargement of BRICS, increasing the depth of these economic ties, he concluded.