De-dollarization: A great danger is looming over the BRICS!

Former Zimbabwean Finance Minister Tendai Biti is skeptical about BRICS’ promises of financial autonomy through their planned move away from the dollar. He believes that nothing positive will come from the initiative actively pursued by the alliance of countries. Even less so for his country that is considering joining the BRICS, which is quite understandable.

De-dollarization, A Risky Path for the BRICS

The BRICS are determinedly working to end the dominance of the U.S. dollar in international transactions. They have recently launched a blockchain and crypto-based payment system.

While the project has numerous supporters among states, some voices are sounding the alarm about the potential catastrophic consequences for the block. Tendai Biti, former Zimbabwe Finance Minister, is among them.

Speaking on the issue, as Zimbabwe wants to join the BRICS, the former treasurer warned the state against blindly following the bloc’s trajectory. Especially with regards to the BRICS’ plan to move away from the dollar.

Tendai Biti warns of an imminent financial abyss for Zimbabwe, predicting disastrous consequences for the constituent countries of the BRICS if they were to embark on what he calls a “perilous” path.

De-Dollarization Poses Disaster For BRICS, Warns Finance Ministerhttps://t.co/w13zEwWVN4

— John Morgan (@johnmorganFL) March 7, 2024

The “Peril” to Be Feared

According to the former Zimbabwean Finance Minister, the dollar exit so desired by the BRICS is nothing more than a fantasy. This is especially true as the conditions for its realization are far from being met.

“The conditions for de-dollarization do not exist,” he stated. Furthermore, he dismisses the notion that local currencies could magically usurp the dominance of the U.S. dollar.

For him, moving away from the dollar would be “an absolute disaster that will cost workers and retirees dearly.” A movement whose implications extend beyond the BRICS to affect developing countries where dependence on the dollar is often a lifeline.

Tendai Biti’s view comes at a time when Zimbabwe is grappling with profound financial problems exacerbated by the woes of its local currency. Indeed, he believes that the promises of the new BRICS development bank offer a glimmer of hope. However, he feels that the risks associated with abandoning the U.S. dollar are so significant that careful deliberation is warranted.