Business leader Jack Truong brings a historical perspective to the debate over the BRICS currency initiative and its potential to challenge U.S. dollar supremacy. Drawing on his extensive business experience as a transformative CEO who has successfully led companies like 3M, Electrolux, and James Hardie, Truong argues that historical precedent demonstrates the significant obstacles facing any currency seeking to displace an established global reserve currency — obstacles that the BRICS nations are unlikely to overcome in the foreseeable future.
The Historical Path to Currency Dominance
Jack Truong emphasizes that the rise of a global reserve currency isn’t achieved through declarations or initial economic strength alone. “History teaches us that widespread currency adoption does not happen overnight. Despite the American economy eclipsing that of the British Empire in the early 20th century, it took decades of trust-building, rapid economic expansion, and tectonic global events — including an American-led Allied victory in WWII — for the U.S. dollar to be crowned the world’s reserve currency in 1944,” Truong explains.
The British pound served as the world’s reserve currency before the U.S. dollar assumed this role.
Truong notes that the transition occurred only when multiple historical factors aligned: “U.S. dollars still did not become a reserve currency until near the end of World War II when the economy of the British Empire pretty much collapsed because of the war. And then of course they lost all of those colonies. And then all the Western European country economies were destroyed. Japan’s economy was destroyed. Russia was destroyed.”
The BRICS Initiative in Historical Context
The BRICS nations — originally Brazil, Russia, India, and China, with South Africa joining in 2010 — have been working to reduce global dependence on the U.S. dollar. The first BRIC summit was held in Yekaterinburg, Russia, on June 16, 2009. By the beginning of the 2010s, the group had established itself as a significant presence on the world stage.
On January 1, 2024, the alliance expanded further, welcoming Iran, Saudi Arabia, the United Arab Emirates, Egypt, and Ethiopia. This enlarged BRICS Plus alliance now represented 3.64 billion people, or 45.78% of the world population, giving them substantial demographic and economic weight.
Despite this impressive collective presence, Jack Truong argues that the BRICS currency initiative faces historical challenges that the member nations are unlikely to overcome. “That means that the BRICS won’t become that reserve currency anytime soon, but we need to take that, that we have that lead. They’re continuing to advance, otherwise they’re going to catch up,” he states.
While acknowledging the historical timeframe for currency transitions, Jack Truong also recognizes that technological advancements may accelerate the process. “And then now with the advent of digital and AI, the speed of change will be even faster,” he observes.
However, Truong maintains that technological advancement alone cannot overcome the fundamental challenges facing the BRICS currency initiative, particularly the lack of cohesion among member nations and their divergent interests.
Gold Reserves: Historical Backing for Currency Value
Historically, gold reserves have played a crucial role in establishing confidence in national currencies. Jack Truong points out the significant disparity in gold holdings between the United States and the BRICS nations, which undermines their ability to create a credible alternative to the dollar.
According to data from Axios cited by Truong, “the U.S. central bank’s gold reserve is still more than 48% of the BRICS countries’ gold reserves combined,” despite recent aggressive gold buying by China, India, and Russia. This substantial gap in gold holdings reflects the historical advantage that the United States maintains in terms of backing its currency with hard assets.
However, Truong also notes that the relationship between currencies and gold has evolved over time: “Because of all of this printing of the U.S. dollars during the past, several decades, and many wars that we have started since 1971, the Vietnam War, you got the Iraq War, you got all this war that we have to fund. So the government has to print the money, so our money supply and GDP now is a lot bigger than all the gold that is available.”
This evolution has implications for any currency system, including potential BRICS alternatives: “So it means that unless there’s going to be a lot more gold mines that have been found, there’s not enough gold to justify, to back up all the economy, the money supply that we have existing in the world today.”
The Historical Development of Financial Infrastructure
The U.S. dollar’s dominance is also rooted in decades of development of supporting financial infrastructure. Jack Truong notes that according to the Bank of International Settlements, the U.S. dollar is involved in almost 90% of foreign exchange transactions and accounts for 85% of transactions in spot, forward, and swap markets. Half of global trade and three-fourths of Asia-Pacific trade are denominated in U.S. dollars.
These statistics reflect not just current usage but the historical accumulation of systems, institutions, and practices that facilitate dollar-based transactions. The SWIFT system, which handles the majority of international financial transfers, primarily operates in dollars. According to Truong, “90% of the SWIFT, really the transaction across the world, it’s still done based on US dollars. And then 48% or 50% of the goods are still traded based on the US dollar, whereas only 2% of that is the Chinese renminbi.”
Developing comparable infrastructure for a new currency would require not only substantial investment but also time to build trust, establish new practices and reinforce new behavior – historical processes that cannot be circumvented simply through declarations or agreements.