A Close Up Of Upwardly Pointing Arrows Surround The Face Of Benjamin Franklin On The U.S. One Hundred Dollar Bill.

BRICS: JP Morgan Predicts the Future of the US Dollar

The comments below are an edited and abridged synopsis of an article by Vinod Dsouza

The world’s leading bank and financial institution, JPMorgan (JPM), analyzed the de-dollarization efforts initiated by the BRICS alliance. The US dollar is at risk of losing its global reserve status as BRICS countries use local currencies for trade settlement. JPM studied the risk of de-dollarization across the world as other currencies look to become the global reserve.

BRICS: JP Morgan Predicts the Future of the US Dollar - BullionBuzz - Nick's Top Six
A close up of upwardly pointing arrows surround the face of Benjamin Franklin on the U.S. one hundred dollar bill.

JPM published a report titled “De-dollarization: Is the U.S. dollar losing its dominance?” Alexander Wise, who covers Strategic Research at JPM, said that the Chinese yuan is the only contender that is looking to topple the dollar.

The report outlined two scenarios that could erode the dollar’s global reserve status. The first is when the global financial situation gets worse, making the dollar lose stability in the markets. The second could be caused by external factors outside the US when other countries boost their native currencies as an alternative settlement tender.

If other countries provide safety and security when the dollar is down, it could lead to the decline of the greenback. However, JPM noted that both scenarios must eclipse each other to challenge the dollar. These two developments need to occur simultaneously to take it on.

“The first scenario includes adverse events that undermine the perceived safety and stability of the greenback. And the US’s overall standing as the world’s leading economic, political, and military power,” according to JPM. “The second factor involves positive developments outside the US that boost the credibility of alternative currencies, economic and political reforms in China, for example.”

However, the chances of these two developments occurring on top of each other remain slim. The US dollar remains the de facto supreme currency, and the Chinese yuan comes nowhere close to threatening it. Therefore, the BRICS bloc might not dethrone the US dollar anytime soon, according to JPM.