US dollar is losing it position of a reserve currency: how new BRICS development bank can ensure a soft landing

Abstract

Freezing or the danger of freezing the assets of many countries can make the run away from the US dollar an uncontrolled process. Whereas in the long term this process may be beneficial for the US and the world economy, the short- and medium-term adjustment costs can be extremely high. To ensure a soft landing the New Development Bank of BRICS countries can issue bonds that would be sold to countries, whose assets have been frozen or are afraid that they might be frozen by the West, so that they can store their foreign exchange reserves in these bonds. The Bank will invest the proceeds from the sale of these bonds in the traditional financial instruments for storing foreign exchange reserves—US and EU treasury bills and bonds denominated in the same dollars and euros. These BRICS bonds would be less prone to sanctions and thus considered safe investment.