The financial world is discussing the potential of digital currencies from BRICS nations to replace the petrodollar. Although this form of BRICS currency is still conceptual and does not exist, it is envisioned as a Central Bank Digital Currency (CBDC), not a cryptocurrency, based on blockchain technology. It is believed that this currency could be similar to China’s Digital Yuan or the digital dollar that the Federal Reserve is currently considering but has not yet issued.
In 1999, several countries of the European Union created the single currency, the euro, and established a new central bank, the European Central Bank. Contrary to expectations, the euro was not digital at its inception; its purpose was to replace national currencies for the member states.
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BRICS nations: Russia and Iran are determined to reduce their reliance on the dollar. The purpose of this common currency is to challenge the dollar’s status as the world’s reserve currency, not to replace the national currencies of the member states.
For decades, the dollar has been the primary global currency, especially after the dissolution of the Soviet Union. Often referred to as the “petrodollar,” it is also the main currency of the global oil market.
However, as China’s influence continues to grow, the United States no longer holds an undisputed global dominance, and the dollar’s position as the dominant currency in the global oil market is being challenged. China, in particular, is seeking to create an alternative global oil market that does not rely on the dollar.
A few years ago, China introduced the Digital Yuan as part of this strategy, although it has not yet replaced the petrodollar globally.
As discussions on the BRICS digital currency progress, the focus remains on whether it can effectively challenge the dollar’s dominance in the global market, particularly in the oil sector. The success and impact of this currency will depend on various economic and geopolitical factors.
