Today, Dhanteras talk about money. A wealth that the whole world is watching. It is a new currency that is being implemented globally to replace the dollar. Here are some questions. What would happen if the dollar disappeared from our lives? Will there be a worldwide upheaval? Or will the rules of business around the world be overturned? Will economic chaos spread? Who tries to replace the dollar with a new currency and why? A few days ago in the BRICS summit in Kazan, Russia, the main agenda was to reduce the importance of the dollar and introduce new currencies. Hello, One of the most talked about words right now is De-Dollarization. That is, a world without dollars. Ask even a young child what the dollar is, and the answer will be that it is a global currency. But why the dollar? Because today countries and businessmen around the world are doing business only in dollars. From Bollywood films to the country's defense deals, mention of million-dollar, billion-dollar deals is commonplace today. But will it always be like this? Maybe one day all transactions will be done in Chinese Yuan or Russian Ruble or Indian Rupee. Or will new currencies enter the global market to replace the dollar? There are speculations about this big change in the world right now. Before talking about the speculations about the new currency, let's talk a little about the dollar… How did the dollar become a global currency? Until World War II, most countries issued currencies of equal value to their gold reserves. In 1944, delegates from 44 countries of the world met and fixed the exchange rate of all currencies against the US dollar, because at that time America had the largest gold reserves and was the largest and most stable economy in the world. The world knew that the American dollar would not sink and if needed, America would give gold in exchange for the dollar. This arrangement lasted for almost 3 decades. The dollar became the safest currency in the world. Why did world transactions start in dollars? There was another major reason for the dollar's strength. In 1945 US President Roosevelt signed an agreement with Saudi. The condition of the agreement was that the US would protect it and in return the Saudis would only sell oil in dollars. This means that if countries want to buy oil, they must have dollars. In the early 1970s, many countries began to demand gold in exchange for dollars. These countries used to give dollars to America and take gold in return. Due to this, America's gold reserves began to decrease. After 80 years i.e. in 2024, 80% of world trade and 58% of payments are done in dollars. Along with this, 64% of the world's loans and 59% of foreign exchange reserves are in dollars. Attempts are being made to reduce this dominance of the US dollar. In July 2022, the price of 1 US dollar crossed 80 rupees for the first time. And today when we are talking about this, one dollar is worth 84 rupees 9 paise. How does America earn billions with the dollar? To buy something we pay its price in many ways like cash, online banking, UPI transfer. Similarly, countries around the world trade using America's SWIFT network. America earns billions through this. The SWIFT network started in 1973 with 518 banks in 22 countries. It currently includes 11,000 banks from more than 200 countries that keep their foreign exchange in American banks. Not all money is invested in business, so countries invest their excess money in US bonds, so they can earn some interest. Including all countries, this money is about $7.8 trillion, twice the size of India's economy. America uses this money for its growth. How does America's SWIFT network work? Believe me, if a company in Ahmedabad wants to buy gems worth 10 thousand dollars from a Sri Lankan businessman, how will it buy? Understand it in four steps… understand from the statistics how strong the hold of the dollar is around the world – but now it is being said that de-dollarization is necessary and this reign of the dollar must end. What is de-dollarization? Currently, countries around the world have to do it in dollars if they want to export or import something. From needles to gold are bought in dollars. Believe that if countries around the world decide that we don't want to deal in dollars and want to deal in some other currency, then it will be called de-dollarization. There is a lot of concern in America over the issue of de-dollarization. There are two major news channels in America. A CNN and Fox TV. Generally, these two have completely opposite attitude on every issue. CNN is considered to be pro-Democratic Party, while Fox TV is considered to be pro-Republican. But on the issue of 'de-dollarization' both the channels are talking about the same thing. And the thing is that if the dollar dominates the whole world, America and Americans will have to suffer the bad consequences. Inflation will go out of control. America's economic hegemony will end in the entire world and America's position as a superpower will be stripped away. What efforts are China and Russia making to replace the dollar? Russia is the second largest oil and gas producer in the world. Its biggest buyers are European countries. In April 2022, Russia asked European Union countries buying natural gas to pay bills in rubles instead of dollars or euros. That is, the countries that previously kept dollar reserves in American banks to buy gas from Russia, had to keep ruble reserves in the Russian Central Bank. Similarly, for the export of other items, Russia also demanded payment in rubles from unfriendly countries. Due to this, Russia's gas exports decreased. The European Union imported about 40% of its gas from Russia by 2021, falling to about 8% in 2023. In June 2022, Russian President Vladimir Putin talked about creating a new foreign reserve of BRICS countries' currencies. Putin's proposal is being considered by BRICS countries Brazil, Russia, India, China and South Africa. China's efforts to replace the dollar with the yuan are similar to America's payment system SWIFT, while China's central bank, the People's Bank of China, has created a system called CIPS. Around 1551 banks from 117 countries are connected with this payment system. Last year more than 123.06 trillion yuan (Chinese currency) was transacted through this system. China has entered into currency swap agreements with more than 40 countries to increase the yuan's importance. Under this agreement the SWIFT system is not required every time there is trade between the two countries. Those countries can trade a fixed amount in their own currency. China signed an agreement with Saudi Arabia in November 2023. This would involve a three-year currency swap using the yuan instead of the dollar, at a cost of about $6.93 billion. This will reduce the dominance of dollar. The exercise to introduce a new BRICS currency against the dollar was the BRICS Summit in the Russian city of Kazan. BRICS host was Putin. Putin said – BRICS currency may take time. BRICS is currently exploring ways to increase the use of national currencies. BRICS currency was not discussed in this summit. Instead, there is talk of gradually reducing the importance of the dollar. Putin has also said that BRICS is talking about a system that can be used in trade between BRICS countries. Also, western currencies like dollar and euro should not be used in international trade. Before the BRICS summit, when the new currency was being discussed, Foreign Minister S. Jaishankar said that India has never targeted the dollar, as it is not part of the country's economic, political or strategic policy. India never had any such intention. It is true that some of India's partners are facing difficulty in doing business in dollars. Will de-dollarization benefit or harm India? India has to tread cautiously for de-dollarization. If India and Russia trade in ruble and rupee then India will benefit. But during the Russia-Ukraine war we have seen that India bought crude oil from Russia in rupees, but after some time Russia started losing money because it accumulated a lot of rupees, which it could not use anywhere. In fact India imports more from Russia and exports less. India will not want China's yuan to rise in importance in BRICS countries and be accepted by all countries, because India does not trust China's currency. Yes, India can consider a new BRICS currency. Finally, famous American economist Barry Eckgreen has written, It costs a few cents to print a $100 note, but other countries have to give $100 worth of goods to get this note. Tune in from Monday to Friday at 8 PM Editor's View… (Richters: Yashpal Bakshi)
Image Credit: (Divya-Bhaskar): Images/graphics belong to (Divya-Bhaskar).
EDITOR'S VIEW: Dollario will lose its color?: What is the benefit to India from de-dollarization, the master plan of BRICS countries to beat the world that is leaping with the force of the dollar? Know, whose currency is stronger
