The BRICS alliance is aiming to uproot the U.S. dollar’s global supremacy by promoting local currencies for trade settlements. BRICS wants to strengthen their native economies by cutting ties with the U.S. dollar for cross-border transactions. The bloc is on a world tour convincing developing countries to use local currencies for trade and not the U.S. dollar.
The development will affect several financial sectors in the U.S. leading to a market decline in the coming years. If BRICS ditches the dollar for trade, the USD currency will return to the homeland leading to hyperinflation in America. 3 U.S. sectors stand to be directly affected if BRICS dumps the dollar for trade.
A total of 3 financial sectors in the U.S. will take a direct hit if BRICS ditches the dollar for cross-border payments. The sectors that could begin to decline include banking, foreign exchange, tourism, and consumer goods and production. Below are the 3 financial sectors that will be impacted if the U.S. dollar is not used for settlements anymore.
Banking and Finance
Technology and Fintech
Consumer Goods and Retail
First and foremost, the banking and financial sector will be the hardest hit as foreign exchanges will begin to decline. The forex markets run on supply and demand, and if the demand for the USD dips, the U.S. Central Bank will find it harder to import the dollar.
If the Central Banks of BRICS countries don’t accumulate the dollar, the U.S. will see its currency returning home. Moreover, the U.S. has been importing its inflation to other nations for years and a return of the currency will lead to hyperinflation in the homeland.
Secondly, the technology sector will take a hit as inflation in the U.S. leads to job losses. Additionally, multinational corporations have to shell out more money to keep businesses afloat and stay at the top without sinking. BRICS can bring down the U.S. economy if they stop accepting the dollar for payments.
Lastly, and in conclusion, the everyday consumer goods in the retail sector will see prices skyrocketing. Also, inflation will take a grip on the markets leading to prices of day-to-day commodities turning expensive. Moreover, the Biden administration must act quickly to counter BRICS and stop the decline of the U.S. dollar.