South America Union USAN May Be Moving Away From The USD, Is The Dollar In Trouble?
I can't say for a fact that I fully grasp the U.S. economy and I totally understand that this is fine because by design, if it were easy to understand the inner workings, then it would definitely not stand so solid over the years.
These structures are meant to appear as simple as possible but yet quite complex across each layer. That said, with how things are going with nations of the world reacting to the rise of digital currencies and emerging self-sovereign financial networks, the United States may be facing a threat to its economic system as firsts, the BRICS made moves to create its own currency for trade settlements, ditching the US dollars and now, the South America Union USAN with the Brazilian president proposing, maybe taking a similar step forward as global financial crisis appear to be on the rise.
Luiz Inacio “Lula” Da Silva, President of Brazil, remarked on the need to retake South American integration mechanisms through the Union of South American Nations (USAN). Lula also proposed to shift away from the U.S. dollar by using a standard reference currency for bilateral settlements among countries in the region.
As reported on bitcoin.com Brazilian president Luiz believes that there's no time to lose, adding that South America has yet another opportunity to walk the path of unity and rebuild its integration method to face the hurdles of the ongoing globalization process.
This as anyone can tell has a lot to do with recent economic situations in the US, the expansion of cryptocurrency and assets and the sanctions thereof and mostly also the move made by the BRICS to ditch the USD. It is currently a global crisis to set some standard of exemption from the negative effects the United States may bring upon themselves via any economic movements or enforcement choices. Clearly, this comes with the realization that setting up an alternative system for support can largely offset the negative effects of bad governance from partner countries or states.
The Crypto Revelation
Lula proposed USAN implements currencies different from the U.S. dollar in settling bilateral payments in the region and rescuing naive credit mechanisms to avoid relying on international financial institutions like the International Monetary Fund (IMF).
"We must also deepen our South American identity in the monetary field through more efficient compensation mechanisms and the creation of a common reference unit for trade, reducing dependence on extra-regional currencies."
Before, in a bilateral meeting with Venezuelan President Nicolas Maduro in Brasilia, Lula stated he had “dreams” of conducting trade relations in South America with a currency different from the U.S. dollar.
The governments of Argentina and Brazil had discussed issuing a South American common currency in January that will be directed to settle international transactions between MERCOSUR and BRICS countries.
When a nation or group of nations talk about leveraging "other currencies" for trade settlements, out of the blues when very much everyone knows the USD is the strongest currency in the world and there aren't really that many great alternatives for any state to suggest trade settlements in alternate currencies so the question is: What currencies are they talking about?
As much as I'd like to say bitcoin, I can't, but I'll explain how this is even the motivation behind all of this. You see, CBDCs are essentially a replica of cryptocurrencies, just outrightly centralized pieces of crap. The way many believe CBDCs will work is simply being a digital representation of the fiat currencies, that is true, but I imagine that CBDCs, unlike fiat, may act as a basket of investment and thus carry more direct value ties with nations' economies.
This would mean that in reality, a CBDC would be a basket of assets and currencies including decentralized ones like Bitcoin(I'm just thinking out loud) because when you come to think of it, Bitcoin is the only reason these people have the guts to launch a digital currency yet alone ditch the USD.
The crypto revelation here is that truly, countless streams of alternative currencies can be created to hedge against the inflation of others with the right structures and hype of course. So crypto has caused these nations to take big steps in the evolution of money and I can only think of many ways this will benefit the cryptocurrency ecosystem and sadly possibly hurt the strength of the USD.
However, when you come to think of the fact that things like stablecoins already exist in the cryptocurrency ecosystem, it becomes increasingly difficult to believe it's going to be easy to move the USD down the table of relevant units of account, but time will tell.