U.S. Treasury Secretary Janet Yellen has defended the dominance of the U.S. dollar amid rising efforts by emerging countries to de-dollarize. Brazilian President Luiz Inácio Lula da Silva, in particular, is set to raise the issue of de-dollarization at the next BRICS meeting. “There is a very good reason why the dollar is used widely in trade,” Yellen argued.

Yellen Defends US Dollar’s Hegemony

U.S. Treasury Secretary Janet Yellen defended the global dominance of the U.S. dollar Friday at a press conference in Paris, where she attended a summit on global finance hosted by French President Emmanuel Macron.

Brazilian President Luiz Inácio Lula da Silva, who also attended the summit, appeared on a panel with South African President Cyril Ramaphosa. Reiterating his call for countries to abandon the U.S. dollar and trade in their own national currencies or other alternatives, the Brazilian leader stressed that the use of the USD in international trade puts countries like Brazil at a disadvantage.

Ramaphosa responded to Lula’s de-dollarization push by saying that “the issue of currency” would be “on the agenda” for the upcoming BRICS meeting, which South Africa is hosting in August, the Financial Times reported. The BRICS countries are Brazil, Russia, India, China, and South Africa.

Commenting on emerging countries, including Brazil, pushing for de-dollarization, Yellen noted that it would be challenging for countries to find a viable alternative to the U.S. dollar, which has dominated global trade for decades. The treasury secretary was quoted as saying:

There is a very good reason why the dollar is used widely in trade and that’s because we have deep, liquid, open capital markets, rule of law and long and deep financial instruments.

While Yellen defended the U.S. dollar, she acknowledged in April that over time, the use of financial sanctions “could undermine the hegemony of the dollar.” She also said earlier this month that the ongoing trend of countries seeking to establish an alternative reserve currency to rival the U.S. dollar “is something that we simply have to expect.” In addition, she emphasized that no country is able to replicate the USD, including China.

Meanwhile, a growing number of emerging markets are ramping up efforts to de-dollarize, including members of the BRICS economic bloc and the Association of Southeast Asian Nations (ASEAN). The BRICS also has a proposal for a common currency that is expected to be discussed at the upcoming summit in August.

Do you agree with Treasury Secretary Janet Yellen about the U.S. dollar’s dominance? Let us know in the comments section below.