Brazil’s President Lula Urges Developing Countries to Abandon Dollar as Global Reserve Currency – According to a report by the Financial Times, there has been an increasing push to eliminate the U.S. dollar’s position as the global reserve currency, and this notion is gaining more traction in 2023. President Lula, who spoke at the New Development Bank (also known as the ‘BRICS Bank’) in Shanghai, emphasized the need to terminate the greenback’s worldwide hegemony.
“Who decided that our currencies were weak or valueless in other countries?” Lula questioned during his speech. “Why can’t a bank like that of the BRICS have a currency to finance trade relations between Brazil and China or Brazil and other countries? It’s difficult because we are unaccustomed (to the thought). Everyone depends on just one currency,” he added.
Lula commented on the world’s reliance on the US dollar during his visit to Shanghai, which came after China inked a new deal with Brazil and made its inaugural payment for Liquefied Natural Gas (LNG) in yuan. Additionally, Russia has demonstrated a willingness to conduct transactions using currencies other than its own. Furthermore, the BRICS countries are collaborating to establish a reserve currency based on the BRICS framework, according to reports.
“I ask myself every night why all countries have to base their trade on the dollar,” Lula emphasized. “Why can’t we trade using our own currencies? Who decided that the dollar would be the dominant currency after the gold standard disappeared?” he inquired. In their report on Lula’s remarks, Joe Leahy and Hudson Lockett of the Financial Times emphasized that attempts to weaken the US dollar “in the short term will encounter significant obstacles.”
They noted that Brazilian miners frequently participate in trades denominated in dollars. Nevertheless, officials from Brazil and other BRICS countries are not alone in considering the possibility of a decrease in the dollar’s dominance. The Philippines’ central bank governor, Felipe Medalla, recently mentioned in an interview that the greenback’s prominence will gradually diminish.
“We want a multi-currency world, but so far, other currencies do not have the necessary international markets to support [it] . This is the advantage of the U.S. dollar – there’s a vast market for government securities,” Medalla stated. “I think over time, the dollar will be less and less dominant, but it’s happening very slowly,” he added.