Latifoğlu, S. (2023). The Shattering Dominance of the US Dollar and the Establishment of a New Financial System. BRIQ Belt & Road Initiative Quarterly, 5(1), 66-85.
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After the financial crisis in 2008, developed Western countries entered a protracted period of stagnation. The economies of the over-financialized Western countries had difficulty compensating for the damages caused by this financialization. During and after the crisis, countries that emphasized production, such as China, overcame the crisis by growing and strengthening. The international institutions of the West have worked hard to compensate for the damage caused by the international financial system established at the behest of the United States. However, priority was given to the US and Western countries. In the post-2008 period, the US dollar and the financial system dominated by it suffered a major loss of confidence. Some organizations started to work as an alternative to this system. Organizations such as the SCO (Shanghai Cooperation Organization) and BRICS, composed of members of independent developing countries, have taken a series of concrete steps and created the basis for a new financial system. The aim of the new financial system is to minimize dollarization, establish alternative international financial institutions, and eliminate the financial hegemony of the US. There are four main components for the breakdown of US financial dominance: the utilization of national currencies in bilateral and multilateral trade agreements, the establishment of new international investment banks, the establishment of national credit card systems on the consumption side, and the widespread usage of currencies alternative to dollar and gold in central bank reserves. The subject of this article are the steps taken by the BRICS in the processes of the decline of the US financial hegemony and the establishment of the new financial system, the importance of SWAP agreements in bilateral and multilateral trade relations, and the course of the financial groundwork established by China and Russia starting from the mid-2010s. All these topics represent the cornerstones of the New Financial System.
Keywords: BRICS, digitalization, dollarization, 5R, New Financial System.