Major question is then, what currency should be reserve?
Euro? - Nowhere near as stable as the dollar, and some quite shaky fundamentals and history? Yen? Pound? Swiss Franc?
I suspect Yuan will be unpalatable.
Euro? - Nowhere near as stable as the dollar, and some quite shaky fundamentals and history? Yen? Pound? Swiss Franc?
I suspect Yuan will be unpalatable.
Pound is about 5% if I remember correctly, which is a higher weighting than the Euro for trade:reserve holding ratio.
Whatever basket we come up with has all the same properties that cause the Euro to not displace USD but worse. Much worse.
China has repeatedly tried to activate a consumption economy (like the US) but the Chinese just save and buy real estate, in part because there is no retirement benefits so they have to self-fund that.
So what currency? Currently, there is no viable alternative to the US dollar. It is backed by the largest economy in the world AND the US military.
You might find people who talk about BRICS like it's a real thing. It is not. It's just a group of randomly selected countries meant to sound nice (literally, South Africa is only there for the S sound) with no unified policy or currency.
It's not the euro either. Europe ultimately is still dependent on US defence and beholden to US foreign policy.
https://www.cfr.org/blog/what-chinese-pension-system-and-why...
Source? Pretty sure BRICS is comprised of the largest regional economies that specifically aren't in the first world, that make for useful alliances for Russia & China specifically.
Africa for a long time didn't have any serious economic contenders for something like BRICS other than South Africa. Nowadays Nigeria is a closer contender on the continent. And of course you have long histories of South African politicians having spent their time in exile during Apartheid in places where they learned to call each other "comrade" even to this day in their political parties. It's not an out of the blue arrangement.
Brazil as far as I'm aware seems to be by far the most economically active in South America too?
India seems like third fiddle to Russia & China in this arrangement as a large economy in Asia.
No government could benefit from manipulating it. How cool is that ?
Apart from having access to cheap energy which is collocated with... specific geographic features like geothermal / hydro energy which not all countries have access to.
Who keep it stable ? Well, who keeps gold stable ? Once an asset becomes the reserve asset, it becomes the standard and other things are priced in that unit, or in units derived from it (here's a kilogram of beef, I'll sell it to you for 2 British pounds which are worth x units of reserve asset)
But maybe you're talking about the stability of its inner properties (its supply, for instance). That for sure is not as stable as gold's. But is its distributed consensus stable enough ? That's a good question. So far, so good.