National Currency Settlements Outpace USD Payments
The BRICS bloc—comprising Brazil, Russia, India, China, South Africa, along with recent additions like Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE—appears to have made significant strides in reducing its reliance on the US dollar. By shifting international trade settlements to national currencies, BRICS members are not only minimizing dependency on the dollar but are also positioning themselves to avoid costs associated with dollar transactions.
This transition is already gaining momentum, according to Sameep Shastri, Deputy Chairman of the BRICS Chamber of Commerce and Industry. Speaking at the “Cloud Cities: Forum on the Future of BRICS Cities” event in Moscow, Shastri explained that national currency settlements are now outpacing dollar-based exchanges within the bloc. “I believe that the amount of use of the national currency has already exceeded the amount of use of the dollar,” Shastri said, reflecting on the success of this de-dollarization initiative.
The shift from the dollar isn’t just about convenience. It’s about cost efficiency. “Using dollars incurs additional costs, which are eliminated if I pay directly in rubles or rupees,” Shastri noted. He also hinted at the possibility of introducing digital currencies into these transactions, further modernizing the payment mechanisms within BRICS.
This move to national currencies is not a spur-of-the-moment decision. The bloc formally committed to this strategy in 2023 during their 15th annual summit, with all members agreeing to enhance the use of their respective currencies in trade. The rationale behind this shift is to create a more stable and diversified global financial system. Anil Suklal, South Africa’s BRICS sherpa, emphasized that using national currencies would contribute to a “stable global financial architecture” and a rebalancing of the global financial order.
This pivot away from the dollar has significant implications for global trade. While the US dollar has long dominated international commerce, the increasing use of national currencies within BRICS could signal a growing trend toward multipolarity in the global financial landscape. By promoting trade settlements in their own currencies, BRICS nations are not only fortifying their economic sovereignty but also lessening their vulnerability to potential external financial pressures tied to the dollar.
As BRICS nations continue to strengthen trade and economic cooperation, the success of this de-dollarization strategy could inspire other regions to adopt similar practices, potentially reshaping the global economic order. Time will tell how far-reaching this shift will be, but for now, BRICS appears to be leading the charge toward a future less dominated by the US dollar.
What do you think about BRICS’ move to reduce dollar dependency? Is this a precursor to a broader global shift? Share your thoughts in the comments section below.
