Economist Nouriel Roubini, also known as “Dr. Doom,” has forewarned of a potential shift in the global reserve currency system from unipolar to bipolar. According to the chief economist for Atlas Capital, countries that are attempting to reduce their reliance on the U.S. dollar are likely to propose the Chinese yuan as an alternative.
The professor emeritus of economics and international business at New York University Stern School of Business discussed the fate of the U.S. dollar as a world reserve currency in an interview with Indian media outlet CNBC TV-18. He stated that a group of nations are forming an alliance to oppose the U.S. and implement an alternative economic, monetary, and global reserve currency system. Roubini stated, “These allies are going to move in the direction of proposing the RMB [renminbi] as an alternative system to the U.S. dollar. We are going to move from a unipolar to a bipolar currency global reserve currency system.”
The economist also talked about India, noting that the country is a promising emerging market and will become a dominant power in the coming years and decades with the help of additional reforms. He believes, however, that India is unlikely to join the de-dollarization movement due to its strategic rivalry with China, despite the potential rise of an alternative currency system.
The BRICS nations, Brazil, Russia, India, China, and South Africa, are reportedly working on the development of a new form of currency that will reduce their reliance on the U.S. dollar. Other countries such as Iran, Indonesia, Turkey, Saudi Arabia, and Egypt have also expressed their interest in joining the bloc. In addition, ten Southeast Asian countries that are members of the Association of Southeast Asian Nations (ASEAN) have agreed to use local currencies to facilitate cross-border trade and investment.
Considering these developments, Nouriel Roubini warns that the global reserve currency system may soon shift from unipolar to bipolar, with most countries proposing the Chinese yuan as an alternative to the U.S. dollar.
