Russia warned of the consequences of requiring BRICS countries not to substitute the dollar in their transactions, after promises of tariffs by US President-elect Donald Trump.
The Kremlin said on Monday that any attempt by the United States to force countries to use the dollar would be counterproductive, after US President-elect Donald Trump threatened to impose tariffs on BRICS member countries if they created their own currency.
Trump on Saturday demanded BRICS members commit to not creating a new currency or supporting another to replace the US dollar, saying they would otherwise face 100% tariffs.
The BRIC group initially included Brazil, Russia, India and China, but has since expanded to include other countries. The grouping does not have a common currency, but long-running debates on the issue have gained some momentum after the West imposed sanctions on Russia over the Ukraine war.
Asked about Trump's comments, Kremlin spokesman Dmitry Peskov said the dollar was losing its appeal as a reserve currency for many countries, a trend he said was accelerating.
“More and more countries are switching to the use of national currencies in their trade and foreign economic activities,” Peskov told reporters.
If Washington uses “economic force” to force countries to use the dollar, it will backfire, he predicted.
“If the United States uses force, as they say economic force, to force countries to use the dollar, the tendency to switch to national currencies (in international trade) will be further strengthened,” Peskov said.
“The dollar is beginning to lose its appeal as a reserve currency for several countries.”
Indeed, the dollar's dominance – the dominant role of the US dollar in the global economy – has been strengthened of late, thanks to the robustness of the US economy, the tightening of monetary policy and the increase in geopolitical risks, even as the Economic fragmentation has prompted BRICS countries to abandon the dollar in favor of other currencies.
A study this year by the Atlantic Council's Center for Geoeconomics showed that the US dollar remains the world's leading reserve currency, and neither the euro nor the so-called BRICS countries have been able to reduce global dependence on the dollar.