Economist Nouriel Roubini, also known as “Dr. Doom”, predicts that the global reserve currency system will shift from unipolar to bipolar. He expects that most countries trying to reduce their dependence on the US dollar will propose the Chinese yuan as an alternative to the US dollar.
Roubini on the US dollar and Chinese yuan as global reserve currencies
Nouriel Roubini, also known as Dr. Doom, discussed the future of the US dollar as the world’s reserve currency in an interview with Indian media outlet CNBC TV-18, published on Tuesday. Roubini is the Chief Economist at Atlas Capital and also Emeritus Professor of Economics and International Business at New York University’s Stern School of Business.
He explained that most of the countries that form a rival group to oppose the US and reduce their dependence on the dollar are striving to establish an alternative world economic, monetary and reserve currency system. The economist added:
These allies are going to move in the direction of proposing the RMB (renminbi) as an alternative system to the US dollar. We are going to move from a unipolar to a bipolar world reserve currency system.
This was not the first time that Roubini mentioned a bipolar monetary system. In February, he warned that the escalation of restrictions imposed by the US government on its adversaries, including financial sanctions, is a catalyst for the rise of a bipolar global reserve currency system in the next decade.
India and de-dollarization
Roubini also spoke about India in particular. While he noted that the country’s fiscal policy “could be better”, he emphasized that it is “okay”, recognizing India as a promising emerging market.
The economist believes that India, along with some other emerging markets, will become a dominant power in the coming years and decades, particularly with the implementation of further reforms. As a result, he views these markets as promising investment destinations for both the fixed income and equity markets.
Dr. Doom does not expect India to participate in the de-dollarization movement despite the potential emergence of an alternative currency system. He believes India’s strategic rivalry with China means it can remain more aligned with the Western monetary system than the renminbi. He opined:
It is now that India may need oil, power, food and fertilizer from Russia, but the dependency may change over time.
The BRICS nations are reportedly working on developing a new form of currency that will reduce their reliance on the US dollar. The BRICS currently consists of Brazil, Russia, India, China and South Africa, but several other countries have expressed interest in joining the bloc, including Argentina, Iran, Indonesia, Turkey, Saudi Arabia and Egypt. Ten Southeast Asian countries that are members of the Association of Southeast Asian Nations (ASEAN) have also agreed to use local currencies to support cross-border trade and investment in the region.
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