The US central bank faces the effects of the de-dollarization by BRICS nations as it sees a massive $1 trillion loss.
Amid the BRICS’ ongoing de-dollarization initiative, the US Central Bank has officially recorded over $1 trillion in losses, which could significantly impact the dollar. The Federal Reserve has observed that its paper losses have been converted into over $100 billion in actual losses. Additionally, there is no relief on the horizon.
Consistently, the nation has combated the accumulation of national debt. Rumors regarding the potential implications for the prominent global reserve currency have arisen amid numerous projections of a debt crisis in 2030. This is particularly alarming given that the nation has yet to resolve its ongoing interest rate dilemma.
The United States Federal Reserve has experienced a loss of $100 billion as the BRICS countries continue to exert pressure on the dollar
The Federal Reserve is experiencing difficulties with its balance sheet. The US Central Bank has officially surpassed $1 trillion in losses, which could affect the dollar’s fate as the BRICS alliance endeavors to challenge its position.
After 2023, the Federal Reserve reported over $984 billion in unrealized losses, as indicated by recent statistics. The current elevated interest rates have further exacerbated this. The Federal Reserve still needs to reduce interest rates, complicating any strategy to address the balance sheet issues.
Economist EJ Antoni recently provided insight into the impending US debt crisis, which is not the only issue influencing the US. He stated that the interest payments on the US national debt will exceed $1.14 trillion this year. That would account for over 76% of the total income tax collected.
In a recent interview with Bloomberg, former Treasury Secretary Steven Mnuchin stated that a robust dollar facilitates the ongoing debt crisis. Mainly, it serves to finance the expanding deficit. However, he also observed that the presidential election in November must mark the beginning of a transformation.
Only the confidence in the US dollar is eroded by the unsustainable and escalating debt concerns. Additionally, it induces inflation and currency erosion at elevated rates. All in all, the continuous debt issue erodes the greenback if it is not addressed. When you consider the opposition that the dollar is encountering, this becomes an even more significant issue.
The BRICS bloc has been the embodiment of de-dollarization for the past two years. It has implemented countermeasures to reduce its international dependence on the asset. Additionally, it has endeavored to establish its currency.
This would facilitate an increase in unilateral commerce that is advantageous to the collective. Additionally, it would offer additional opportunities to reduce the dollar’s influence. Given the other current issues, This could significantly affect the currency’s value.
