Taking a leaf from the BRICS playbook, several banks, brokers, and financial entities in Europe are receiving requests to accept local currencies and not the US dollar, reported the Luxembourg Times. The European financial firms are receiving more requests for transactions, including hedges that sidestep the US dollar. The requests are coming in for the Chinese yuan, Hong Kong dollar, the Emirati dirham, and the euro.
Also Read: BRICS: JP Morgan Predicts 20% Decline in the US Dollar
This is the first time that foreign institutional funds are demanding to transact in local currencies with European finance entities. The BRICS initiative of pushing local currencies ahead and not the US dollar has reached European shores in 2025. For example, if a Japanese company wants to transfer money to a Philippine-based fund through European firms, they typically send the US dollar, and the firm then converts the money into Philippine pesos.
But companies are now demanding that strategies be considered that do not use the US dollar as an ‘in-between’ currency. This development gives BRICS an added advantage, as their ideology of giving local currencies more power on the global stage by sidestepping the US dollar is working.
Also Read: GDP of BRICS Countries Outperforms Global Average, US Distantly Behind
BRICS: Demand For Local Currencies Rises in European Firms, US Dollar Declines
The BRICS alliance’s ideology is reaching European shores as local currencies play a prominent role, not the US dollar. Gene Ma, Head of China Research at the Institute of International Finance, said that the demand for non-US currencies is due to the rise in fintech development. “The increase in transactions between non-US currencies is largely due to technological development and increased liquidity. The trading parties feel that the price may not be worse than using the US dollar, so transactions naturally pick up.”
Also Read: 3 Conditions BRICS Must Meet Before Launching New Currency
The rising demand for currency derivatives that bypass the US dollar comes after the trade wars and tariffs under Trump. Though the US President has paused tariffs for 90 days, a grey cloud still hangs over the financial sector. Read here to know how many sectors in the US will be affected if BRICS starts trading only in local currencies and not the US dollar.