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Billionaire venture capitalist Chamath Palihapitiya believes that the emerging trend of large economies moving away from the US dollar to settle trades is nothing but noise.
In a new episode of the All-In Podcast, Palihapitiya says the recent deal between China and Brazil, which the two countries to exchange goods and services in their own currencies without going through the dollar, does not, in any way, negatively impact the dollar’s dominance in global trade and finance.
“This whole thing is a huge nothingburger. This is the third deal that China has done. The other two countries are Pakistan and [Russia]. And the reason why is I’ve seen a lot of people on Twitter now breathlessly rambling on de-dollarization, and all of this stuff.
And I think if any of these people would think from first principles, the first thing that you would know is that the yuan is pegged to the US dollar. And so as long as it is pegged, whether you trade through the US dollar or you don’t and you directly go to yuan, you’re indexed to the US dollar. And then you use a dollar swap to convert it to the currency you need.
So I think this is kind of like a lot of folks who don’t really know what’s going on.”
Palihapitiya’s comments come as a group of economically-aligned nations collectively known as BRICS is reportedly planning to create a new currency that could rival the US dollar’s dominance in international trade.
According to a report, the new currency could be backed by gold, rare earth metals or something else entirely.
The acronym BRICS stands for the countries of Brazil, Russia, India, China and South Africa.
