BRICS is working towards building a parallel financial system providing an alternative to the US and Western-led global hegemony. The alliance is using local currencies, launching new payment mechanisms, and rewriting trade deals to its benefit. All of these cause harm to the long-term prospects of the US dollar while their economy reduces dependence on the West.
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BRICS: Can Their Parallel Financial System Fully Work?
The short answer is yes, they can build one. BRICS can build a parallel financial system that works. However, building it and replacing the US and West-dominated financial system is challenging. The challenge occurs as the alliance is a diverse bloc having no common ground. Each economy is still developing, while many others remain poor. They need to maintain a balance in developing their own economy and also that of the alliance.
This would involve pouring in more time, energy, and resources into it, which is mostly protracted. Also, the bloc members are not united and mostly don’t agree on various parameters. This includes India and China, among others. BRICS also lacks the geopolitical momentum to make its parallel financial system work. They can offer very little on the table as compared to the US and the West.
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While their strategy to diversify from the US dollar is ongoing, the scale is small. Compared to the towering global economy that is fueled by the US, the BRICS parallel financial system stands no chance of matching the giant that the West is. Even with their best shot, the line to reach the top always seems far.
For the BRICS parallel system to work, they need to offer assistance that the US and the West don’t. Until now, there is nothing that BRICS can offer that the West can’t. It would take just a weekend for the West to replicate the same financial structure. The West has an abandoned financial resource at its disposal, which developing countries will find expensive.