United States to STOP BRICS New Payment System - Sign of U.S. Economy Collapse?

United States to STOP BRICS New Payment System - Sign of U.S. Economy Collapse?

Nov. 12, 2024

THE CURRENCY WAR - FOLLOW THE MONEY

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Leading investment bank JP Morgan has warned that the new BRICS payment system could weaken the U.S. dollar's global hegemony. The bloc is working towards the formation of a new payment system called 'BRICS Pay' where a basket of currencies will be used to settle cross-border transactions. The yet-to-be-launched payment mechanism will not incorporate the U.S. dollar in its systems for global trade and settlements.

The move will boost the de-dollarization agenda and make the U.S. dollar lose out on the supply and demand mechanism. Read here to know how many sectors in the United States will be affected if BRICS ditches the dollar for trade. JP Morgan has predicted that the U.S. dollar could face severe challenges with the upcoming BRICS Pay system.

Investment bank JP Morgan wrote in its recent report that the BRICS payment system could advance the de-dollarization agenda further. Apart from member nations, other countries could also begin settling trade and commerce in the new mechanism. Increased usage of local currencies in the oil markets has already gained steam since 2022. It could further expand if emerging economies find out that the system would help their native currencies to grow stronger.

“Some signs of de-dollarization are evident in the commodities space, where energy transactions are increasingly priced in non-USD currencies" read the report from JP Morgan. “Globally, new payment systems are facilitating cross-border transactions without the involvement of U.S. banks, which could undermine the dollar's clout."

The bank wrote that the BRICS de-dollarization narrative has gained momentum and is now a reality in emerging economies. "The narrative that the U.S. dollar's reserve currency status is being eroded has gained momentum as the world is dividing into trading blocs in the aftermath of Russia's war with Ukraine and heightened U.S., China strategic competition," said Joyce Chang, Chair of Global Research at JP Morgan.

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