President Vladimir Putin has urged a greater use of national currencies in commerce between the BRICS nations, which might lead to yet another stalemate between the US and Russia.
To improve the speed, effectiveness, and security of transactions, he has suggested developing a separate settlement system on the BRICS platform. The US may suffer numerous consequences from the Russian president's proposal to establish an "independent settlement system" in national currencies among the BRICS nations.
Why does Putin want this?
To lessen the US dollar's hegemony worldwide, Russian President Vladimir Putin has called for the BRICS nations to create a "independent settlement system" in their respective national currencies. The US dollar has been the primary reserve currency of the world for many years. This indicates that a significant portion of the foreign exchange reserves held by central banks worldwide are in dollars. The majority of global trade, particularly that involving oil and other vital commodities, is conducted in US dollars. The US now holds a special place in the world economy as a result of its dominance. This enables them to keep a strong hold on the global financial system and borrow money at low interest rates.
How has the US been dominating the world?
The US directly benefits from the dollar's dominance in a number of ways. In order to meet its needs, the US government can first raise money at a low cost of borrowing. The dollar is always in demand around the world, which explains why.
Second, it may exert economic pressure by using the dollar's dominance, as it has done by enforcing sanctions against nations like Russia. The US has the power to seriously harm a nation's economy by barring it from the dollar-based financial system. It gains more geopolitical power as a result.
Thirdly, American businesses find doing business abroad easier and less expensive because they don't have to worry about currency exchange rates all the time, and the US can export some of its inflation to other nations. The dollar's strong worldwide demand contributes to its low level of domestic inflation.
How can india benefit from this?
By avoiding trading in dollars and encouraging trade in its own currency, india might gain a lot of advantages in the midst of the continuing tariff battle. India's international trade is largely dependent on the US dollar, and changes in the dollar's value directly affect the indian economy. As a result, exports may become less competitive and imports more costly. By trading in its own currency, india can lower this currency risk. Indian companies will be less concerned about losses resulting from changes in the dollar-rupee exchange rate when transactions are conducted in rupees. Additionally, this will lower operating costs and increase the competitiveness of exports.
To improve the speed, effectiveness, and security of transactions, he has suggested developing a separate settlement system on the BRICS platform. The US may suffer numerous consequences from the Russian president's proposal to establish an "independent settlement system" in national currencies among the BRICS nations.
Why does Putin want this?
To lessen the US dollar's hegemony worldwide, Russian President Vladimir Putin has called for the BRICS nations to create a "independent settlement system" in their respective national currencies. The US dollar has been the primary reserve currency of the world for many years. This indicates that a significant portion of the foreign exchange reserves held by central banks worldwide are in dollars. The majority of global trade, particularly that involving oil and other vital commodities, is conducted in US dollars. The US now holds a special place in the world economy as a result of its dominance. This enables them to keep a strong hold on the global financial system and borrow money at low interest rates.
How has the US been dominating the world?
The US directly benefits from the dollar's dominance in a number of ways. In order to meet its needs, the US government can first raise money at a low cost of borrowing. The dollar is always in demand around the world, which explains why.
Second, it may exert economic pressure by using the dollar's dominance, as it has done by enforcing sanctions against nations like Russia. The US has the power to seriously harm a nation's economy by barring it from the dollar-based financial system. It gains more geopolitical power as a result.
Thirdly, American businesses find doing business abroad easier and less expensive because they don't have to worry about currency exchange rates all the time, and the US can export some of its inflation to other nations. The dollar's strong worldwide demand contributes to its low level of domestic inflation.
How can india benefit from this?
By avoiding trading in dollars and encouraging trade in its own currency, india might gain a lot of advantages in the midst of the continuing tariff battle. India's international trade is largely dependent on the US dollar, and changes in the dollar's value directly affect the indian economy. As a result, exports may become less competitive and imports more costly. By trading in its own currency, india can lower this currency risk. Indian companies will be less concerned about losses resulting from changes in the dollar-rupee exchange rate when transactions are conducted in rupees. Additionally, this will lower operating costs and increase the competitiveness of exports.
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