BRICS US Banks Face $500B in Losses as De-Dollarization Grows

While the BRICS alliance is strengthening its banking system, the US seems to be on a downhill. In the last three years alone, 15 US banks collapsed renewing fears of financial instability across the country. The BRICS bloc has pushed de-dollarization efforts especially since it expanded its numbers. Now, the pressure is mounting on the US dollar, as the country’s banks face over $500 billion in unrealized losses, according to a new report.

A finance expert at Florida Atlantic University revealed that the United States’ unrealized losses on investment securities are over $500 billion as of the end of Q2 2024. This is a slight downtrend from the first quarter of the year: a decrease to $513 billion from $516 billion. However, it’s still a significant loss for one of the strongest economies in the world. Banks are now saddled with more than half a trillion dollars on the balance sheets in their papers. The development shows that the US banks are at risk while the central banks of BRICS are massively accumulating gold to hedge against the US dollar.

Rebel Cole, Ph.D., Lynn Eminent Scholar Chaired Professor of Finance in FAU’s College of Business. He says that despite the slight downtrend in unrealized losses for banks between quarters: US banks aren’t in the clear. “The 10-year treasury yield has been extraordinarily volatile for the past two years as inflation has increased. Banks are also affected by their exposure to uninsured deposits, so the combination of unrealized losses and exposure to uninsured deposits can be particularly pernicious.” This combination can be especially lethal as the US dollar suffers as well from inflation and BRICS pressure.

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Growing US Debt and Bank Losses Weakens US Dollar, Economy Against BRICS

Furthermore, the United States’ debt has continued to rise this year past its all-time high. The current debt nationwide sits at over $35.7 trillion. Over the last three days alone, the debt has surged by a noticeable $345 billion. The US government is currently paying $3 billion in interest on its debt per day. The increased debt and unrealized losses are only putting more pressure on the US economy, chagrin to US investors but to the pleasure of BRICS.

While the unrealized losses are only on the balance sheets, they could become a liability when the banks require liquidity. This puts the US banking system under pressure as BRICS continues dumping US treasuries and the dollar. The BRICS alliance is also spearheading the de-dollarization movement by convincing developing countries to end reliance on the dollar. With more countries looking to dethrone the greenback, further pressure could be put on the US banks, and thus the entire US economy.