Former White House Economist Warns that new BRICS currency will erode US dollar globally

Joseph Sullivan, the former White House economist, has warned that a BRICS currency would erode the U.S. dollar’s dominance.

"If member nations use only a common BRICS currency for international trade, they would remove an impediment that now thwarts their efforts to escape dollar hegemony,” he described.

Sullivan also discussed de-dollarization and the potential impacts of a BRICS currency on the USD in an opinion piece published by Foreign Policy Monday. The BRICS nations are Brazil, Russia, India, China, and South Africa.

Sullivan was a special advisor and staff economist at the White House Council of Economic Advisers during the Trump administration. He is currently a senior advisor at the Lindsey Group, an economic advisory firm. Referring to the hypothetical BRICS currency as “the BRICS,” he warned:

If the BRICS used only the brics for international trade, they would remove an impediment that now thwarts their efforts to escape dollar hegemony.

“Those efforts now often take the form of bilateral agreements to denominate trade in non-dollar currencies, like the yuan, now the main currency of trade between China and Russia,” he continued.

The former White House economic advisor believes that it is “realistic to imagine the BRICS using only the brics for trade.”

He added that with the creation of a BRICS currency: The BRICS would also be poised to achieve a level of self-sufficiency in international trade that has eluded the world’s other currency unions.

“Because a BRICS currency union — unlike any before it — would not be among countries united by shared territorial borders, its members would likely be able to produce a wider range of goods than any existing monetary union,” he explained.

However, Sullivan expects the BRICS currency to “raise a litany of thorny practical concerns.”

He detailed: “Used primarily for international trade rather than domestic circulation within any one country, the brics would complicate the job of national central bankers in BRICS countries. Creating a supranational central bank like the European Central Bank to manage the brics would also take work. These are challenges—but not necessarily insurmountable ones.”

The economist proceeded to discuss the BRICS currency displacing the U.S. dollar as a global reserve currency among member countries. He noted: “The dollar’s global role has always been a double-edged sword for the United States. Though it does allow Washington to add sanctions to its foreign-policy toolkit, by raising the price of the U.S. dollar, it raises the cost of American goods and services to the rest of the world, decreasing exports and costing the United States jobs.”

In conclusion, while clarifying that he believes “the dollar’s reign isn’t likely to end overnight,” the former White House advisor cautioned:

A brics would begin the slow erosion of its dominance. A growing number of people have warned that the creation of a BRICS currency would threaten the USD’s dominance. White House economist Jared Bernstein said during a hearing on his nomination to be chairman of the Council of Economic Advisers that China wants to weaken the U.S. dollar’s reserve currency status.

GAROWE ONLINE