The BRICS nations along with several others, are expected to heighten de-dollarization efforts during the forthcoming summit in Kazan, Russia. These nations aim to lessen their dependency on the US dollar and focus on developing their own currencies and reserve systems.
Historically, these nations have attempted to reduce the control of the US dollar over global finance, as echoed by Brazil’s President, Luiz Inácio Lula da Silva, last year. Alternatives like transactions and loans in other currencies are being promoted, signalling a shift away from US dollar dominance.
The upcoming BRICS meeting could be a significant turning point in the global finance sphere. As predicted by Christopher Granville, global political research manager at TS Lombard, there may be a strengthening resolve to shift towards local currencies.
Intensifying de-dollarization in BRICS nations
This possible change could disrupt the global financial landscape and put the Chinese yuan into focus due to China’s strong economic presence within the BRICS group.
One potential solution is the creation of a Central Bank Digital Currency (CBDC) platform which could be more stable than current cryptocurrencies. Although a number of central banks experimented with this system in 2022, its full implementation has yet to occur.
Russia’s Foreign Minister Sergey Lavrov supports a digital currency-based system. Analyst Granville suggests China could benefit the most from this transition due to its ongoing trade disputes with the US. Simultaneously, China’s central bank is progressing with its own digital currency.
The introduction of CBDCs could invoke a shift in international currency flow and reshape the global financial landscape. Despite potential disruptions and challenges, there is a global potential for more efficient and secure cross-border transactions in the digital era.
