BRICS member China wants to make the Chinese yuan the world's reserve currency by overthrowing the US dollar. China has convinced BRICS to start the dedollarization process and regulate trade in local currencies. While this is a way to reduce dependence on the US dollar, not every developing country agrees with China's ideals.
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The communist country was the first to implement the dedollarization agenda after the US imposed sanctions on Russia in 2022. Xi Jinping's government went on a global tour to convince developing countries to accept the Chinese yuan in trade deals. Read here to know how many sectors in the US will be affected if the BRICS countries ditch the dollar for their trade.
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BRICS: Chinese Yuan Won't Overtake US Dollar as World's Reserve Currency
A currency runs on ‘trust’ and is the most important part of the forex markets. Without trust, any currency can fall apart, allowing other currencies to take the top spot. Trust in the US dollar has not eroded and will not disappear in the coming decades, despite the attempts of the BRICS to dedollarize the dollar. Let alone foreign investors, even big companies in China do not want the Chinese yuan and want to hoard the US dollar.
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China had to incite multinationals by announcing that they would have to trade some of their transactions in the Chinese yuan. These forced dedollarization initiatives by BRICS member China will not last long and may fall apart sooner or later. Only a handful of countries trust the Chinese yuan, while the majority believes that the US dollar is the strongest.
The latest data from the Atlantic Council shows that the US dollar is used for almost 88% of all global transactions. Therefore, the dominance of the US dollar is strong with little to no challenge from the Chinese yuan. The BRICS nation of China may not see the Chinese yuan defeat the US dollar, at least not in our lifetime.