Janet Yellen, the US Treasury Secretary, addressed concerns about the supremacy of the US dollar and the potential challenges posed by the proposed BRICS currency during a press conference at the US Embassy in Beijing on Sunday. The press conference was held at the end of her four-day visit to China.
Despite no official announcement from BRICS, speculation has been circulating about the new BRICS currency after a Russian news agency reported that Russia confirmed the BRICS group would launch a new gold-backed currency.
Yellen was asked to comment on the plan by BRICS member countries (Brazil, Russia, India, China, and South Africa) to create a new currency that many believe will impact the supremacy of the US dollar. The Treasury Secretary responded by saying, “I just want to reiterate what I have said in the past, which is that I believe the United States can rest assured that the dollar will continue to play the predominant role in facilitating international transactions and serve as a reserve currency in the years to come.” The Treasury Secretary further clarified, “I don’t see that role being threatened by any development, including the one you mentioned (BRICS).”
Yellen continued, stating, “I have said before, and I would like to repeat, that due to the role of the dollar and its ability to help us impose sanctions, there are certainly motivations in countries around the world to find an alternative.” However, the Treasury Secretary affirmed that all the data she is aware of indicates that the dollar is used in over 90% of international transactions, and she does not believe there is an alternative that could replace it in the foreseeable future.
While the Russian news agency mentioned that Russia confirmed BRICS would launch a gold-backed joint currency, Leslie Maasdorp, Vice President and Chief Financial Officer of the New Development Bank, also known as the BRICS Bank, stated last week, “Developing any alternative to the US dollar is actually a medium to long-term ambition.”
In June, Yellen defended the US dollar by saying, “There’s a very good reason to use the dollar widely in trade, and that’s because we have deep capital markets, long financial intermediation, open capital flows, and the rule of law.” However, in April, she acknowledged that the use of financial sanctions “could undermine the long-term dominance of the dollar.”