BRICS is keen on de-dollarization to strengthen their native economies and bolster their local currencies. The alliance discussed the usage of local currencies among members for cross-border transactions ending reliance on the U.S. dollar. The bloc of five nations has invited six new countries to join the alliance. The countries are Saudi Arabia, the UAE, Egypt, Argentina, Iran, and Ethiopia.
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However, a financial expert predicts that BRICS expansion could speed up the de-dollarization process. The U.S. dollar could be less used for global remittance and the bloc might trade with other developing countries in local currencies. The development puts the U.S. dollar on the back foot as other competitor currencies will enter the global trade markets.
BRICS: De-Dollarization Begins With Expansion, Says Chinese Financial Expert
Sun Qi, the Executive Director of the Center for Russian and Central Asian Studies at the Shanghai Academy of Social Sciences, said that BRICS expansion will speed up the de-dollarization efforts.
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“As more and more countries join the ranks of BRICS + partners, the transition to settlements in local currency or third-party currencies in mutual trade will increase significantly, thereby accelerating de-dollarization,” he said to Russian news outlet Tass.
The financial expert says that many other developing countries have an attraction to the new BRICS model of trade. “For most developing countries, development is a top priority. That is why the BRICS cooperation mechanism is attractive to these countries,” he said.
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He added that local currencies will be on the conversation menu at the 15th BRICS summit in Johannesburg. “BRICS currency, used for transactions between the BRICS countries, can be discussed in full and in detail,” he summed it up. BRICS is an acronym for Brazil, Russia, India, China, and South Africa.