Renowned currency economist Stephen Jen, the CEO of Eurizon SLJ Capital Limited, has shed light on a remarkable acceleration in the global shift away from the US dollar. In a recent interview with Die Welt, Jen underscored that this transformation has surged tenfold since February 2022 compared to the previous 15-year trajectory.
Jen, an esteemed former economist at both the International Monetary Fund and Morgan Stanley, noted that many analysts need help to grasp the significance of this shift due to their reliance on nominal assessments of central banks’ dollar reserves, primarily based on data disseminated by the IMF. However, he argued that considering fluctuations in the dollar’s value, a more nuanced approach would reveal a noteworthy decline of approximately 11% in its share of foreign reserves since 2016.
As Jen contended, the turning point was Washington’s decision to freeze Russia’s dollar reserves in response to Moscow’s military actions in Ukraine. This move, he emphasized, has not only sent shockwaves through Beijing but also generated unease among other emerging economies.
Previously, holding reserves in US dollars had been universally regarded as an utterly secure practice, making this development particularly consequential.
Furthermore, Jen highlighted the growing inclination of BRICS nations to explore alternatives to the US dollar. According to his analysis, the BRICS consortium, currently comprised of Russia, Brazil, India, China, and South Africa—with the addition of six new members slated for January 2024, including Iran, Saudi Arabia, the United Arab Emirates, Argentina, Egypt, and Ethiopia—has experienced a substantial amplification of its economic influence.
When accounting for purchasing power, the BRICS collective now contributes 32% of global economic output, surpassing the 30% attributed to the G7 countries.
