U.S. Treasury Secretary Janet Yellen has stated that she does not see the U.S. dollar’s dominance being threatened by any development, including the proposed BRICS currency. Yellen stressed that all the data of which she is aware shows that the dollar is overwhelmingly used in international transactions, emphasizing: “I don’t think that there is an alternative that could possibly displace that for the foreseeable future.”
Janet Yellen on BRICS Currency, Challenges to US Dollar Dominance
U.S. Treasury Secretary Janet Yellen addressed concerns regarding the dominance of the U.S. dollar and the potential challenges by a proposed BRICS currency during a press conference at the U.S. embassy in Beijing on Sunday. The press conference took place at the conclusion of her four-day visit to China.
While there has been no official announcement by the BRICS, speculation about a new BRICS currency has been rife after Russian news outlet RT reported that Russia has confirmed that the BRICS bloc will launch a new currency backed by gold.
Yellen was asked to comment on the plan by the BRICS countries (Brazil, Russia, India, China, and South Africa) to create a new currency that many say would erode the dominance of the U.S. dollar. “I just want to reiterate what I’ve said in the past, which is I think the United States can rest assured that the dollar is going to play the dominant role in facilitating international transactions and serving as a reserve currency in the years ahead,” the treasury secretary replied, elaborating:
I don’t see that role being threatened by any development including the one that you’ve mentioned [BRICS common currency].
“I’ve said previously and would reiterate that because of the role of the dollar and its ability to enable us to implement sanctions, there certainly is motivation in countries around the world to find an alternative,” Yellen continued. However, the treasury secretary emphasized:
All the data of which I’m aware shows that the dollar is overwhelmingly, close to 90%, used in international transactions, and I don’t think that there is an alternative that could possibly displace that for the foreseeable future.
While RT reported that Russia has confirmed that the BRICS will launch a common currency backed by gold, Leslie Maasdorp, vice president and chief financial officer of the New Development Bank, also known as the BRICS Bank, stated last week that “The development of anything alternative [to the U.S. dollar] is indeed a medium to long-term ambition.”
In June, Yellen defended the U.S. dollar, stating: “There is a very good reason why the dollar is used widely in trade and that’s because we have deep, liquid, open capital markets, rule of law and long and deep financial instruments.” However, she acknowledged in April that over time, the use of financial sanctions “could undermine the hegemony of the dollar.”
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