• Billionaire Chamath Palihapitiya believes the US dollar will remain as the world’s reserve currency despite efforts by BRICS countries to move away from it.
• Palihapitiya cites a chart from the IMF that shows 60-70% of central banks hold US dollars since 1999.
• He also notes that BRICS nations are attempting to settle trades in yuan, but it is still pegged to the US dollar.
US Dollar To Remain Anchor Currency
Billionaire Chamath Palihapitiya believes the US dollar will continue to reign as the world’s reserve currency despite the push by BRICS countries to move away from it. Despite global demand for US government debt being in a downtrend, Palihapitiya argues that central banks around the world are still buying up US dollars. He highlights a chart from the International Monetary Fund (IMF) showing that 60-70% of these foreign exchange reserves have been held in USD since 1999.
Yuan PEGGED To The Dollar
Palihapitiya adds that foreign governments and central banks are unlikely to stop accumulating US dollars any time soon, even though BRICS nations are actively looking for alternative currencies. He explains that while China’s yuan is an attempt at decoupling, it is still pegged to the US dollar and therefore remains dependent on its value.
What Is BRICS?
BRICS stands for Brazil, Russia, India, China and South Africa; these five emerging economies set up this organization with a goal of creating an alternative to US dollar hegemony.
Why Are Central Banks Buying The Dollar?
Palihapitiya argues that central banks choose to buy up USD because they feel comfortable in its stability and liquidity; he points out that this is why foreign reserves are on an overall incline when it comes to holding American currency. Additionally, he says there is no incentive for China or other BRICS nations to let their currencies float freely until their economies become more stable internally.
In conclusion, despite attempts by other nations and organizations such as BRICS trying to find alternatives for settlement currencies such as yuan pegged against the dollar, Palihapitiya believes that USD will remain as one of – if not -the anchor currencies used by central banks due its stability and liquidity over time