A new alliance is looking up to the de-dollarization ideals of BRICS and is ready to use the upcoming unified payment system instead of the US dollar for cross-border transactions. This puts the US dollar at risk as several developing countries are planning to cut ties with the reserve currency.
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Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade. The 16th summit held last week in Russia’s Kazan region has emboldened other alliances to follow the de-dollarization bandwagon. The domino effect could snowball further in the coming years and could lead to a US dollar deficit.
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After BRICS, The SCO Alliance Gets Ready to End US Dollar Reliance
BRICS member China has convinced other member nations in the Shanghai Cooperation Organization (SCO) to ditch the US dollar for trade. The SCO member nations have aligned with the unified payment system and will reduce US dollar dependency after launch. The Secretary-General of SCO, Zhang Ming confirmed that the bloc members will use the new payment system in the future.
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“The discussion on creating a single payment system is currently in progress in an informal format. At the moment, work is being done to increase the share of national currencies in mutual settlements,” he said. The SCO bloc plans to settle trade in local currencies currently but will switch to the new payment system next. This makes both BRICS and the SCO alliance the frontrunners of de-dollarization.
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Ming also shared that the SCO plans to increase the share of local currencies for trade and transactions. “In 2022, the Samarkand Summit was successfully held, where a concept for increasing this share was adopted. Work in this area is actively progressing,” he shared. In conclusion, the end of the US dollar usage is consensually being promoted by BRICS and the SCO bloc.