Putin on the Collapse of the U.S. Dollar-Based Financial System
Russian President Vladimir Putin has expressed his belief that the global financial system, which is based on the U.S. dollar, is gradually collapsing. Speaking at the 20th-anniversary meeting of the Valdai Discussion Club, Putin stated that the Bretton Woods system, which was established with the dollar as its foundation, is becoming outdated. He highlighted that a currency is a reflection of the issuing country’s economic power and noted that the share of the American economy in global GDP is declining.
The Increasing Power of BRICS Countries
In contrast to the declining share of the American economy, Putin emphasized that the purchasing power parity of BRICS countries compared to G7 countries is increasing. He attributed this growth to the admission of new members to the organization and stated that it holds significant meaning. The BRICS economic bloc has recently extended membership to Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE). The leaders of Brazil, Russia, India, China, and South Africa have also expressed their support for using local currencies in international trade and financial transactions.
BRICS’ Approach to Currency
Regarding the creation of a common currency for BRICS countries, Putin suggested focusing on establishing a settlement system and financial logistics to facilitate payments between member states in national currencies. While he acknowledged that theoretically a single BRICS currency is possible in the long term, he emphasized that achieving economic parity among member countries would be necessary before pursuing such an endeavor.
Hot Take: The Decline of the U.S. Dollar-Based Financial System
During his speech at the Valdai Discussion Club meeting, Russian President Vladimir Putin discussed the gradual collapse of the global financial system based on the U.S. dollar. Putin highlighted the declining share of the American economy in global GDP and emphasized the increasing purchasing power parity of BRICS countries compared to G7 countries. This shift signifies a changing economic landscape and the growing influence of emerging economies. While Putin did not advocate for an immediate creation of a single BRICS currency, he suggested focusing on establishing a settlement system to facilitate payments in national currencies. The future of the U.S. dollar-based financial system remains uncertain as global economic dynamics continue to evolve.
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