RBA's Ties to US Dollars Leaves Australia Exposed

The BRICS member states are abandoning the United States' dollar and other nations are seeking to join the BRICS bloc, which accounts for 25% of world trade and is expected to grow to 50% by 2030. The US dollar is now just 58% of all world trade. As the world moves away from the US dollar its value may fall.

Our Reserve Bank holds AU$35 billion in foreign reserves and half of that is in US treasuries securities. I asked the Governor whether the RBA had modeled the probability of that fall on Australia's US holdings and whether they intended to invest in more US treasuries. The governor expects Australia's economy to grow and foreign holdings to increase — as part of risk management however they are looking at other currency markets in line with the RBA's key bench marks, but without speculating on any future currency fluctuations.

The BRICS group of major emerging economies — Brazil, Russia, India, China (the four founding members of the bloc) and South Africa is holding its 15th heads of state and government summit in Johannesburg on 22nd August. Founded as an informal club in 2009, it was initially created as a platform to challenge a world order dominated by the US and its allies with a focus on economic cooperation and increasing multilateral trade and development. As many as 23 countries have now formally applied to join the group and many more are said to be interested.

With more countries investing in and accumulating greater gold reserves and widespread reports that the BRICS alliance is working on creating a new gold-backed trading currency, I asked the Governor if Australia is planning to increase our gold reserves.

The answer was no. "We've got our gold reserves and we haven't bought and sold for a long time, and we have no intention of changing that."

Transcript: https://www.malcolmrobertsqld.com.au/rbas-ties-to-us-dollars-leaves-australia-exposed/