By Kelechi Deca

At the United Nations General Assembly meeting of 2009, the most trending issue within the media centre was the BRICS, a new grouping of emerging markets economies banding together to chart what was described as a new geopolitical course.

UNGA is not necessarily an economic summit, so not much was deliberated on the BRICS issue. Those of us with more economic bent within the media centre looked forward to where the issue would be given attention. And that was at Istanbul, Turkey, where the 2009 IMF/World Bank annual meetings took place.

So in the last 13 years, we have been on the issue of BRICS, and how it will change everything, for example, turn the table on United States hegemony. The desire to set up a parallel group of countries to counter America’s emerging power is not new. It has always been around for decades.

Students of global development are well aware that there’s been this push against the weight throwing America, even before BRICS was established. About 67 years ago, what we call the Bandung Summit took place by bringing countries of Asia and Africa to galvanise their collective muscle in the context of the Cold War and assert themselves in the international system.

It is quite interesting reading from those who think that dedollarisation of global economy would lead to the end of US global influence as we know it. Their assumptions are fuelled by their beliefs that the issues as basically political. They are wrong.

Also we have people who think dedollarisation of global economy will lead to the economic decline of America. That points to their ignorance of economic history . If Britian did not go under in the over 70 years when the dollar knocked the pound sterling off from its global standing, what makes people think the US would be different.

There are two things we should keep to mind, Let’s make it three. First, the US will lose its privileged pole position not because others started using another currency instead of the dollar, but when its economy is overshadowed and outgrown by one or two other countries. But as long as its economy remains robust and highly competitive globally, it will still remain top dog.

While many easily see the advantages of the dollar being a global currency, they do not see the responsibilities that come with issuing the world’s main reserve currency. If and when the dollar ceases to be global reserve currency, the American central bank ( Federal Reserve Bank) would pay more attention to its domestic issues conserving resources instead of being the global monetary barometer for the world.

Third is that the BRICS are far less prepared and ready than their supporters know and believe. They need a political system, and economic system tied to trade, and a monetary system. Each of these takes time. The BRICS and the PEAKS have not even scratched the challenges facing them as a group not to talk of launching a currency that would upend the dollar.

As long as the two main drivers of the group are China and India, there are big huddles to cross. Anger at America is not a strategy with enough traction to fuel the dream.

Before launching a dedollarisation ambition, China and India needs to mend their fences, settle some of their decades old feuds, have a single monetary policy direction, and agree to build a strong bilateral relationship. As long as both countries still view each other with great suspicion, and can go to war any moment, such momentum can’t mount a challenge to America’s economic and monetary hegemony.

But the most important case against the BRICS efforts to launch a monetary system that can upend the dollars global influence which many of their online fans groups are either uninformed about or chose not to acknowledge is China’s monetary system.

As long as China maintains a system where foreign and domestic savers and investors are not free to decide for themselves when to buy or sell assets denominated in the remnimbi, like they do with the dollar, a big challenge still faces the project.

The recently launched Xi Thought, which is a new strategy paper encapsulating the new policy direction China should take in the mold of the Chinese leader’s personality is unwilling to let go of capital controls which it has always used to control the system. Xi sees monetary control as an integral part of political control.

There’s still yet no alternative to the dollar. At least for now. Its biggest threat will likely be digital currencies. So when the challengers work things out we will know, and we will write about it.

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