BRICS has called the US dollar-dominated SWIFT global payment system “unfair and costly”. The majority of countries, including BRICS settle global trade in the US dollar using the SWIFT payment mechanism. A SWIFT transfer comes with a price as it has multiple charges including transfer fees, exchange rates, and hidden fees. Leading global banks charge close to 3-5% on the exchange rate for each transfer between two countries.
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The country that initiates the transaction in SWIFT bears the burden of the exchange rate while the US profits. The BRICS alliance now wants to reverse the process making local currencies benefit and not the US dollar. Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade.
BRICS Look For Alternative To the US Dollar’s SWIFT System
South Africa’s Foreign Minister Naledi Pandor said in a press conference that BRICS will redress the SWIFT payment system. She said that the SWIFT payment mechanism favors the US dollar and the West but penalizes BRICS and other developing countries. Pandor labeled SWIFT “unfair and costly” to other countries indicating an uneven international playing field.
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BRICS will “redress what we regard as a rather unfair and costly payment system,” she said on SWIFT, reported CNN. Her statement comes at a time when BRICS member Russia is working towards building a new alternative payment system challenging SWIFT, and the US dollar will not be integrated.
For the uninitiated, Russia confirmed that is building a payment system that will make developing countries move from SWIFT. The new payment mechanism will allow other countries to settle trade in local currencies and not the US dollar. This will help developing countries strengthen their local currency and will help their native economies grow.
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The BRICS alliance is spearheading the decline of the US dollar and is also convincing other countries to follow suit. Russia and China are the most aggressive in their de-dollarization plans while the other BRICS members remain neutral.