I think people overlook a fundamental point: a global reserve currency isn't established through trade alone it is built on trust. Even if BRICS nations were to start conducting all their trade in the yuan or local currencies tomorrow, the question remains: what happens to the surplus currency? Would central banks and sovereign wealth funds be willing to park trillios in that currency? Does that country's bond market offer liquidity comparable to US Treasuries? Can capital move freely? Is there the same level of global trust in its institutions and legal system?
The biggest problem for BRICS isn't the dollar; it is BRICS itself. India and China are strategic rivals, Russia is under sanctions, the members have divergent economic priorities, and reaching a consensus on a common monetary framework is extremely difficult. It took Europe decades to create the Euro, despite having a far higher level of political and institutional integration than BRICS does.
That is why, in my view, BRICS will not replace the dollar. While it could certainly weaken the dollar's monopoly and increase the role of local currencies in regional trade, becoming a global reserve currency is vastly different from serving as a currency for trade settlement.
The reader raises a valid and important distinction that actually **complements** your report more than it contradicts it.
Your paper does **not** argue that BRICS or the yuan will soon replace the US dollar. In fact, it repeatedly states that **de-dollarization is likely to be gradual**, that the **US dollar continues to benefit from deep capital markets, institutional credibility, and investor confidence**, and that the likely outcome is a **multipolar monetary system rather than the end of dollar dominance**.
A concise reply could be:
Thank you for the thoughtful perspective. Agree with much of what you've said. A global reserve currency is built not only on trade, but also on trust, deep and liquid capital markets, institutional credibility, legal certainty, and the ability to absorb trillions of dollars of global reserves. These are structural advantages that the US dollar continues to enjoy.
Not argueing that BRICS or the YUAN will replace the dollar in the foreseeable future. Rather, the central thesis is that geopolitical instability—particularly in the Gulf—could accelerate an already existing trend toward greater use of local currencies and alternative settlement mechanisms. Trade settlement and reserve currency status are indeed two different concepts.
Where I differ slightly is that reserve currency status is not static. History shows that it evolves over decades as economic, geopolitical, and financial realities change. Even if BRICS remains institutionally fragmented, increased regional trade in local currencies, reserve diversification, and alternative payment systems can gradually reduce the dollar's monopoly without displacing its global leadership.
So, both the thought processes actually complementing rather than contradicting: the dollar is unlikely to be replaced anytime soon, but it may gradually face increasing competition in an increasingly multipolar financial system.
I think people overlook a fundamental point: a global reserve currency isn't established through trade alone it is built on trust. Even if BRICS nations were to start conducting all their trade in the yuan or local currencies tomorrow, the question remains: what happens to the surplus currency? Would central banks and sovereign wealth funds be willing to park trillios in that currency? Does that country's bond market offer liquidity comparable to US Treasuries? Can capital move freely? Is there the same level of global trust in its institutions and legal system?
The biggest problem for BRICS isn't the dollar; it is BRICS itself. India and China are strategic rivals, Russia is under sanctions, the members have divergent economic priorities, and reaching a consensus on a common monetary framework is extremely difficult. It took Europe decades to create the Euro, despite having a far higher level of political and institutional integration than BRICS does.
That is why, in my view, BRICS will not replace the dollar. While it could certainly weaken the dollar's monopoly and increase the role of local currencies in regional trade, becoming a global reserve currency is vastly different from serving as a currency for trade settlement.
The reader raises a valid and important distinction that actually **complements** your report more than it contradicts it.
Your paper does **not** argue that BRICS or the yuan will soon replace the US dollar. In fact, it repeatedly states that **de-dollarization is likely to be gradual**, that the **US dollar continues to benefit from deep capital markets, institutional credibility, and investor confidence**, and that the likely outcome is a **multipolar monetary system rather than the end of dollar dominance**.
A concise reply could be:
Thank you for the thoughtful perspective. Agree with much of what you've said. A global reserve currency is built not only on trade, but also on trust, deep and liquid capital markets, institutional credibility, legal certainty, and the ability to absorb trillions of dollars of global reserves. These are structural advantages that the US dollar continues to enjoy.
Not argueing that BRICS or the YUAN will replace the dollar in the foreseeable future. Rather, the central thesis is that geopolitical instability—particularly in the Gulf—could accelerate an already existing trend toward greater use of local currencies and alternative settlement mechanisms. Trade settlement and reserve currency status are indeed two different concepts.
Where I differ slightly is that reserve currency status is not static. History shows that it evolves over decades as economic, geopolitical, and financial realities change. Even if BRICS remains institutionally fragmented, increased regional trade in local currencies, reserve diversification, and alternative payment systems can gradually reduce the dollar's monopoly without displacing its global leadership.
So, both the thought processes actually complementing rather than contradicting: the dollar is unlikely to be replaced anytime soon, but it may gradually face increasing competition in an increasingly multipolar financial system.
liked the responce
REGARDS