By employing XRP as an alternative to the US dollar, India and the UAE have achieved a significant milestone in the hydrocarbon trade. This historic transaction emphasises a burgeoning trend among nations to abandon the dollar in favour of digital currencies and local alternatives.
India acquired crude from the UAE using local currencies; however, the transaction was executed via the XRP Ledger System, which additionally offers rewards in the form of CryptoTradingFund (CTF) tokens as a cashback.
The de-dollarization movement is being spearheaded by the BRICS nations, which now include the UAE as a result of its 2024 membership expansion. One of the objectives is to enhance economic autonomy and decrease dependence on the US dollar.
The US dollar has historically been the dominant currency in global finance; however, recent geopolitical tensions and sanctions have caused numerous nations to reevaluate their dependence on it. In collaboration with the Dubai International Financial Centre (DIFC), Ripple is driving innovation in this field. Ripple’s partnership with DIFC is designed to facilitate the connection between emerging developers and the region’s largest innovation hub, which consists of over 1,000 tech startups, digital laboratories, venture capital firms, regulators, and educational institutions.
Brad Garlinghouse, the CEO of Ripple, stated, “The UAE is one of the most advanced jurisdictions in the world in terms of providing regulatory clarity for licensed firms that offer virtual asset services…”
The development of novel applications on the XRP Ledger (XRPL) is being supported by Ripple, who have committed one billion XRP to this vision.
The Transition to De-Dollarization
The US dollar has been the preeminent global currency for an extended period; however, its position is being increasingly challenged. The United States has employed its financial system as a means of imposing sanctions on countries such as Iran and Russia. This has prompted other nations, particularly those within the BRICS, to reevaluate their use of the dollar.
Vladimir Putin, the President of Russia, has characterised the transition from the dollar as “irreversible” and “gaining momentum.” Furthermore, there is an increasing trend within the BRICS to transact trade using local currencies rather than the dollar. The necessity of the dollar in international commerce has been openly questioned by Brazilian President Luiz Inácio Lula da Silva.
This viewpoint is shared by numerous BRICS leaders, and discussions regarding the establishment of a new BRICS currency are currently in progress. This currency that is being proposed would facilitate commerce among the BRICS nations, thereby eliminating the need for the dollar. Nevertheless, substantial obstacles persist, such as the intricacies of establishing a unified monetary system and the diverse economic conditions among the BRICS countries.
