Official: BRICS drops US dollar for settlements

Economic tides shift, and in a landmark decision, the BRICS economic bloc has decided to cut ties with the US dollar for its trade settlements. A move that’s bound to create ripples across global economic waters.

A Shift Towards Local Currencies

This monumental decision is not a mere whim; it has been a steady journey for the BRICS nations to shift focus toward their local currencies, especially on the international stage.

The move stands as a testament to the bloc’s resilience and strategic foresight, given the dominant role the US dollar has played in the world economy for decades. What prompts such a massive move, you ask? Well, the answer lies in the bloc’s recent strategies and announcements.

Brazil’s audacious leader, Luiz Inacio Lula Da Silva, not only confirmed this radical step but also declared the expansion of the alliance. By 2024, the BRICS umbrella will shelter six more nations.

While the specifics remain under wraps, the intrigue builds. What does this mean for the global economic order, and more importantly, for the once mighty US dollar?

The Summit that Changed the Game

Related video: Could BRICS nations dethrone US dollar dominance with a new currency? (Straight Arrow News)

So why is everyone talking about D dollarizing now?

Could BRICS nations dethrone US dollar dominance with a new currency?

The global community’s gaze fixed on the BRICS summit, an event that promised revelations and strategies that could redefine geopolitical dynamics.

Among the myriad of discussions and debates, two topics were under the limelight: the promotion of local currencies and the potential expansion of the bloc.

The revelation to ditch the dollar didn’t emerge from a vacuum. It is rooted in a well-thought-out strategy presented by Brazil’s da Silva. His vision was clear: to enhance payment options and fortify the BRICS nations against economic vulnerabilities.

This isn’t just about trading mechanisms; it’s about power dynamics and asserting independence in a world too dependent on traditional giants. Interestingly, the momentum of this movement doesn’t solely belong to the existing BRICS members.

The intrigue intensifies as the alliance gears up to embrace new members, with countries like Saudi Arabia, the UAE, and Iran waiting in the wings. The potential exit of oil sales from the dollar’s domain presents a scenario that is sure to keep global economists and policymakers on their toes.

What the introduction of these heavyweight economies means for the US dollar and its longstanding dominance is a narrative worth watching. For some, this could be seen as BRICS challenging the status quo.

For others, it might be a reminder that in the ever-evolving world of geopolitics, no single currency, no matter how powerful, can rest on its laurels. The ramifications of this decision are undeniable, and they resonate louder given the historical dominance of the greenback.

In closing, the BRICS decision is not just an economic one; it’s a bold statement. It sends a message to the world: traditional powerhouses and currencies can be challenged, new alliances can form, and the future?

Well, it’s as unpredictable as ever. But one thing is for sure, with these recent shifts, the global economic and political landscape will never be the same again.

Official: BRICS drops US dollar for settlements (

Point To Note Before You Get Excited:

The GDP of Saudia Arabia is less than the Netherlands.
Brazil is less than Texas or France. Russia is now less than California.^tfw|twcamp^tweetembed|twterm^1694755981509410956|twgr^f04cec063129abf893ae6c3d6a0181494cfa4add|twcon^s4_&

1 Like

The Brics currency ignores all the traumatic lessons of the half-baked euro

Story by Ambrose Evans-Pritchard •1d


DJI▲ ‎+0.37%‎

INX▲ ‎+0.23%‎

COMP▲ ‎+0.14%‎


The Brics have infinitely less in common than the countries of the European Union - Shutterstock

The Brics have infinitely less in common than the countries of the European Union - Shutterstock© Provided by The Telegraph

Dollar hegemony has become a curse for the global economy. It serves the interests of no country, least of all the US itself.

The frenetic monetary lurches of the US Federal Reserve are transmitted worldwide in disruptive cycles of dollar liquidity, and amplified through the $12 trillion market for offshore dollar loans and a vast nexus of debt contracts linked to US borrowing costs.

When the Fed giveth by means of zero rates and money creation (QE), it floods the international system with cheap funding and sets off destabilising credit booms.

When the Fed taketh by driving real rates through the roof and destroying money (QT), it drains global liquidity and tortures dollar debtors everywhere. It overwhelms other central banks trying to navigate the reefs – even in Europe or China – and imposes a de facto monetary policy on countries whether they want it or not.

The effects can be violently pro-cyclical and malign. Ultimately it “blows back” into the US economy. That is the risk we face now as the Fed pushes half the world into a credit crunch by the most aggressive monetary tightening in 40 years.

We badly need other currencies to step up to the plate. None is fit for purpose. As the saying goes, Europe is a museum; Japan is a nursing home; and China is a prison.

“I ask myself every night why all countries have to base their trade on the dollar,” says Brazil’s Lula da Silva. The answer is that the US is the world’s only full-spectrum, military, energy, agricultural, economic, financial, technological and scientific superpower.

Lula has fixed fervently on his Brics currency, “just like the Europeans created the euro”. In theory it is to be launched by a coalition of the willing, drawn from Brazil, Russia, India, China, South Africa and – following the 15th Brics summit this week in Johannesburg – Saudi Arabia, the Emirates, Argentina, Iran, Egypt and Ethiopia.

The painful lessons of the half-formed euro seem to have been entirely forgotten or never learned. Few Brics ideologues recognise what it takes to forge a monetary union and – much harder – to make it work.

The key eurozone states are all democracies. They are broadly aligned on foreign policy, and all are Nato members. They have a shared legal and commercial Acquis, drafted by a shared parliament and a shared executive, under a shared supreme court, in a union with collective institutions dating back to 1957. Member states have no veto over swathes of policy.

Yet even this level of integration proved too little for a functional currency.

One-size-fits-all interest rates for economies with moderately different structures and trend growth rates led to massive intra-EMU trade and capital imbalances. The bloc lurched from one crisis to another, dividing Europe into hostile camps of creditor and debtor nations, all ending in an investment collapse and an economic lost decade.

The Brics have infinitely less in common.

Some are commodity importers, some are exporters. Some are democracies, some are dictatorships at daggers drawn with democracy. China and India are on opposite sides of Asia’s strategic divide. None is willing to submit to joint laws, joint courts and anything like a joint executive, all sine qua non for the management of a currency.

To try to launch Lula’s moneda on this foundation is “madness”, says Lord Jim O’Neill, former Mr Brics at Goldman Sachs.

Brazil President Lula has fixed fervently on the idea of a Brics currency, ‘just like the Europeans created the euro’ - UESLEI MARCELINO/REUTERS

Brazil President Lula has fixed fervently on the idea of a Brics currency, ‘just like the Europeans created the euro’ - UESLEI MARCELINO/REUTERS© Provided by The Telegraph

The debate is surreal. The Brics bank itself operates in dollars and is a struggling credit risk, compelled to pay 100 basis points above World Bank rates to raise funds on global capital markets.

“The New Development Bank has the US dollar as its anchor currency. We are firmly embedded in the US dollar hemisphere,” said Leslie Maasdorp, the bank’s chief financial officer, speaking to Bloomberg.

Every Brics member knows that the project has evolved into a front for Chinese ambitions. For all the talk of “multipolarity” in Johannesburg, China’s internal strategy documents leave no doubt that it seeks to replace the US as global hegemon, establishing its own dominance over the economic and technological structures of the 21st century.

It is odd that the Brics idea has become so fashionable at this juncture, especially since Russia has destabilised the world food supply and launched a reactionary imperialist war, revealing in the process that it is a military paper tiger.

The downfall of the American liberal order certainly looked plausible 15 years ago when the US banking system blew up, the dollar was in free-fall, and the US was running out of energy.

The Brics boom was at its apogee. People could argue that compound growth rates would lead to a definitive Chinese sorpasso in the 2020s and from there to a new post-Western order revolving around the rising industrial powers of Asia. It was wrong but not absurd.

Needless to say, this narrative was based on the fallacy of extrapolation. China was by then already walking into the stagnation trap, pursuing the policies that would cause a collapse of total factor productivity growth and therefore trend growth of circa 2.5pc by the late 2020s.

These policies were not a “mistake”. They were and are an inescapable feature of Communist Party ideology and control. China cannot give up its top-down Leninist model of credit allocation and social control because to do otherwise would lead to political revolution.

Charles de Gaulle believed America enjoyed an ‘exorbitant privilege’ as the reserve currency hegemon - AP

Charles de Gaulle believed America enjoyed an ‘exorbitant privilege’ as the reserve currency hegemon - AP© Provided by The Telegraph

Both Brazil and Russia fell into economic depressions after the commodity supercycle peaked in 2011. By then the resource curse of overvalued currencies had hollowed out their industrial cores. Over the last 12 years their combined GDP has fallen from 30pc to 15pc of US output (World Bank data). Every Brics economy has run into trouble, with the signal exception of India.

It is the US that has refused to validate the prophets of decline. America is again the world’s largest combined producer of oil and gas. It commands the digital world. The Biden dollar is on steroids.

The Brics process is no longer driven by US weakness but by US strength, above all fear of the US Treasury’s long reach through the world’s dollarised payment system, though the export of Western woke moralism also stirs the pot.

For the same reason, today’s Brics posturing has its limits. How many countries really want to join the Sino-Russian quarrel with the G7?

The addition of Saudi Arabia sounds glamorous but its economy is not much bigger than the Dutch economy, and oil is yesterday’s business model. The bigger the Brics family, the more incoherent it becomes, and the more ridiculous it is to think of monetary union.

A Brics coin or not, the world still needs a better currency system. The euro is condemned to second-tier status until Germany bites the bullet on fiscal union, which it refuses to do. The Chinese yuan cannot be a global reserve currency until it is fully convertible and until China accepts a structural current account deficit, needed to supply yuan liquidity.

Charles de Gaulle thought America enjoyed an “exorbitant privilege” as the reserve currency hegemon. It is better described as an “exorbitant burden”. America must run large deficits to keep the game going. This is the Triffin Dilemma. If it ever stops, the dollar shortage will cause the international finance system to seize up.

This may well happen if a re-elected Biden persists with Buy American protectionism, or if a Trump II opts for sweeping tariffs and incipient autarky.

We should stop wasting breath on a Brics currency and worry more about what awaits the global economy if the US refuses to carry its Triffin burden any longer.

Can BRICS dethrone the US dollar? It’ll be an uphill climb, experts say

The world’s reserve currency is facing a challenge from Global South countries who want options beyond the greenback.

A bank employee count China’s renminbi (RMB) or yuan notes next to U.S. dollar notes at a Kasikornbank in Bangkok, Thailand, January 26, 2023. REUTERS/Athit Perawongmetha

China is among a number of developing countries looking to challenge the dominance of the US dollar [File: Athit Perawongmetha/Reuters]

By Sumayya Ismail

Published On 24 Aug 202324 Aug 2023

Johannesburg, South Africa – For 80 years, the United States dollar has dominated all other currencies. But a grouping of developing countries tired of the West’s looming presence over global governance and finance is determined to take it down a peg.

The process of de-dollarisation is “irreversible” and “gaining pace”, Russian President Vladimir Putin said on Tuesday in a virtual address to the BRICS summit in Johannesburg, where the leaders of Brazil, India, China, and South Africa are gathered for three days.

The dollar has been the world’s principal reserve currency since the end of World War II, and is estimated to be used in more than 80 percent of international trade.

Earlier this year, Brazilian President Luiz Inacio Lula da Silva questioned why all countries had to base their trade on the dollar, and prior to that, a top Russian official suggested that the BRICS grouping was working on creating its own currency.

Calls for a global shift away from dollar dominance are not new, nor are they unique to BRICS, but experts say recent geopolitical shifts and growing tensions between the West and Russia and China have brought them to the fore.


Brazilian President Luiz Inacio Lula da Silva has questioned the world’s dependence on the dollar [Ueslei Marcelino/Reuters]

In early 2022, Western sanctions over Russian’s invasion of Ukraine froze nearly half of Russia’s foreign currency reserves and removed major Russian banks from SWIFT, a messaging network banks use to facilitate international payments.

Later in the year, the US imposed restrictions on exports of semiconductor technology to China.

“As the US weaponizes the dollar in the Russian and Iran sanctions, there is increasing desire by other developing countries to seek alternative currencies for trade, investment, and reserves, as well as developing alternative multilateral clearance systems outside of SWIFT,” Shirley Ze Yu, a senior visiting fellow at the London School of Economics, told Al Jazeera.

Yu added that as the US Federal Reserve has raised interest rates in recent years, “developing countries have widely suffered from paying higher interests on their dollar debt and battling the exchange rate impact from a strong dollar. The interest to borrow in local currencies or other currencies is strongly motivated by economic considerations”.

The impetus for Global South countries trying to find an alternative is more a “practical consideration” than a moral one, said Gustavo de Carvalho, a policy analyst on Russia-Africa ties at the South African Institute of International Affairs, as they view the recent sanctions and ask: “What are the risks that we are facing by engaging with one currency globally that may be utilized for political purposes?”

Speaking at a workshop on BRICS and the global order in Johannesburg last week, de Carvalho laid out some “very loose” options BRICS may consider, including using a basket of currencies from BRICS countries, using gold as a peg for a new potential currency, or even using cryptocurrencies.

“Each of them are quite separate and probably much more mid-to-long term than they are short term,” he said.

A BRICS currency?

Considering the possible currency options, Danny Bradlow, a professor with the Centre for Advancement of Scholarship at the University of Pretoria, said he doubts many people would want to go back to the gold standard, and cryptocurrencies are an unlikely option because they are “even riskier”.

“Which cryptocurrency would you use, which stable currency, and none of them have shown to be particularly useful in international trade,” Bradlow told Al Jazeera.

On the creation of a separate BRICS currency, experts are sceptical.

“Creating the BRICS currency will require a set of institutions,” Yu said. “Institutional creation requires a common set of standards and underpinning values. These are very difficult to achieve, although not impossible.”

Chris Weafer, an investment analyst with Macro-Advisory, a strategic consultancy that focuses on Russia and Eurasia, described the idea of a BRICS currency as a “non-starter”.

“Even people in various governments know that this is not going to happen, or not for a very, very long time,” Weafer told Al Jazeera.


The US dollar has been the world’s reserve currency since the end of World War II [File: Rick Wilking/Reuters]

Bradlow agreed.

“The idea of the BRICS creating an alternative to the dollar seems completely fanciful and unrealistic,” he said, noting the major differences between the five economies.

“If they did have a single currency uniting them, it would be dominated by the biggest and most powerful economy in the grouping, which is China, and why would smaller countries want to link their monetary policy and aspects of their fiscal policy to the Chinese economy?” Bradlow said.

“It would open up all sorts of areas of risk and constrain their freedom of action in ways that would be unacceptable to all of them.”

While talk of a possible currency has focused attention on options to replace the dollar, South Africa’s BRICS ambassador, Anil Sooklal, said the goal is less about replacing the dollar than giving the world more choices.

“BRICS is not anti-West. We are not in competition,” Sooklal told Al Jazeera. “Nor are we against the dollar. But what we are against is the continued dominance of the dollar in terms of global financial interactions.”

Weafer said that regardless of what reforms BRICS wants to implement, the grouping won’t have much room to develop if it is seen as a choice between East and West or “the West and the rest”.

“I don’t think anybody wants that,” he said.

Local currencies

In finding alternatives to the dollar, Weafer said BRICS is likely to push for the greater use of local currencies.

“We already know that 80 percent of the trade carried about between Russia and China is settled in either Russian rubles or Chinese yuan,” he said.

“Russia is also trading with India in rupees … So you’re not talking about a new currency, you’re talking about settling in the South African currency or the Russian currency.”

Even outside the core BRICS group, other countries have begun trading in local currencies. The United Arab Emirates and India last month signed an agreement enabling them to settle trade payments in rupees instead of dollars.


The BRICS leaders are meeting in South Africa amid calls for a greater international role for the Global South [File: Gianluigi Guercia/Pool via Reuters]

However, the widespread use of local currencies also brings up a new challenge: convertibility.

Weafer said that countries carrying out more trade also need to hold more of each other’s currency in reserve.

“And you have to be able to convert them into your currency,” he said.

This is difficult in India, where capital controls prevent people from taking money out of the country without permission. Once the rupee is out of India, it still needs to be converted into another currency – like the dollar – before it can be converted into the local currency of choice.

“So [there are] huge changes that have to take place; India would have to drop capital controls and then there would have to be almost an alternative to the SWIFT banking system the global system created, so as to allow the transfer of these currencies between the trade partners, avoiding global sanctions, which would currently block that,” Weafer said.

“And then each country would have to hold more of the respective trade partner’s currency.”

These changes would have to be implemented slowly and on a country-by-country basis, he said.

Bradlow said BRICS countries holding more reserves of local currencies is a “highly questionable” strategy as a reserve currency should be stable with access to liquid markets that can be moved in and out of quickly.

“The dollar is really the only currency that offers all those benefits at the moment,” he said.

Bradlow added that the question of who a country is trading with will also determine what it is willing to accept.

For example, South Africa, which does a lot of trade with China, may be keen to keep reserves of yuan, but as its other major trading partners are in the West, it will need more dollars than Brazilian reais or Russian rubles.

Dollar to remain king

For South Africa’s Sooklal and other BRICS leaders, the rationale for alternatives to the dollar is similar to that for changing the global governance architecture in general.

“We’d like to live in a multipolar society, a multipolar world,” Sooklal said.

“Trade is no longer dominated by those countries that dominated trade in the 70s, 80s, 90s – that era is over. We also want to see a multipolarity of choices, a multipolar financial world; we don’t want to be pegged to one or two currencies as the currencies of choice,” he added.

Sooklal pointed to the Pan-African payment and settlement system, a cross-border infrastructure to facilitate direct payment transactions across the continent, as a model to follow. He said it will save an estimated $5bn annually in trade transaction fees when compared with just using SWIFT.

Still, analysts say the dollar will remain king for the foreseeable future.

According to Weafer, we are still “decades” away from anything really challenging its dominance.

He said that even if the BRICS create a common currency, it may eventually work similarly to the Euro, which has not seriously challenged the dollar’s dominance.

For oil and other commodities, “the reference price is the dollar price”, Weafer said, explaining that countries using alternative currencies will still use the greenback to determine the value of what they buy and sell.


Tinubu deserves kudos for shunning BRICS – Okechukwu

Story by Emmanuel Uzodinma •3h

[Tinubu deserves kudos for shunning BRICS – Okechukwu](MSN

Tinubu deserves kudos for shunning BRICS – Okechukwu© provided by Daily Post Nigeria

At the 15th BRICS Summit in South Africa, the bloc admitted Argentina, Egypt, Saudi Arabia, and UAE among other intending developing countries into its folds, thus fuelling speculations that Nigeria’s application was rejected for not meeting some crucial membership criteria.

But, in a statement made available to DAILY POST on Sunday, Okechukwu, who is also a founding member of All Progressives Congress, APC, declared that Nigeria is better off maintaining her decades-old diplomatic standpoint as a non-aligned.

He stressed that he was thrilled when the Vice President, His Excellency Kashim Shettima, cleared the air and said, “So far, we have not applied for the membership of BRICS. And it is majorly informed by the fact that my principal, President Bola Ahmed Tinubu is a true democrat that believes in consensus building.”

Okechukwu stated: “Whereas one has nothing against Brazil, Russia, India, China nor our brothers South Africa that make up the BRICS; however Nigeria stands to benefit hugely if we maintain our age-old standpoint of multilateral diplomacy.”
He pointed out the worldview origin of BRICS, saying, “records have it that to spur economic development outside the Breton wood system, the BRICS, a bloc comprising Brazil, Russia, India, China and later South Africa, was formed.

“Ironically, the acronym was coined in 2001 by Goldman Sachs and 2006, the bank opened an equity fund for investors in the BRICS. The group had since established New Development Bank (NDB).”

On the proposal that Nigeria’s membership of BRICS has economic growth as the main goal, Okechukwu argued that whilst economic growth is important, it should not be at the expense of Nigeria’s cherished freedom and rule of law, which the leadership of the bloc abhors.

“Whilst one agrees that BRICS may engender economic growth; however neither the West nor Russia or China is Father Xmas, therefore our destiny is in our hands. And most importantly we cannot gloss over our cherished freedom and rule of law which maybe in jeopardy in the BRICS alliance.

“Otherwise, at the last count, the New Development Bank (NDB), a multilateral lending institution set up in 2014, based in Shanghai, had $25bn in recorded assets in 2022, less than a tenth of the World Bank’s total,and not much economic growth was stimulated,” Okechukwu explained.

Accordingly, he appealed to President Tinubu to maintain Nigeria’s multilateral diplomatic strategy, which he said “allows Nigeria today and in the future to operate and relate freely with all blocs and ultimately guard jealously our national interest.”

Tinubu deserves kudos for shunning BRICS – Okechukwu

US sees wake-up call, if not threat, as BRICS bloc expands

Story by AFP •4h


DJI▲ ‎+0.68%‎

INX▲ ‎+1.30%‎

COMP▲ ‎+1.70%‎


BRICS leaders meet in Johannesburg on August 24, 2023

BRICS leaders meet in Johannesburg on August 24, 2023© Phill Magakoe

BRICS summit statement pointed to the breakdown of the World Trade Organization’s dispute settlement system, where Washington since Donald Trump’s presidency has blocked appointments as it alleges unfair treatment.

Biden’s national security advisor, Jake Sullivan, vowed to fight to reform the Washington-based lenders at an upcoming summit in New Delhi of the Group of 20 – boosting the roles both of the US-backed organization, which brings together both rich and poor nations and of India, a key member of both clubs.

Publicly, Washington played down the BRICS expansion, saying only that countries can choose their own partners.

Sullivan, noting the wide policy differences among the countries, earlier told reporters, “We are not looking at the BRICS as evolving into some kind of geopolitical rival to the United States or anyone else.”

  • ‘Alternatives, not replacements’ -

But experts said the BRICS expansion at least showed demand for a new way to address unmet needs, on the economic if not security front.

Emerging nations are “looking for alternatives, not replacements” to the US-led order, said Sarang Shidore, director of the Global South program at the Quincy Institute, which advocates a less military-focused US foreign policy.

“It’s a message to the United States that these gaps are hurting and our countries are not just complaining about them or carping from the sidelines, but actually taking action to try and fill these gaps,” he said.

Biden has ramped up climate action at home but, faced with opposition from Trump’s Republican Party, the United States – the largest historical carbon emitter and second currently to China – is unlikely to come close to the president’s promises of more than $11 billion a year by 2024 to help developing countries hardest hit by climate change.

“I think the US is starting to take it seriously,” Shidore said of developing countries’ concern. “But those are statements – is there money attached to it?”

  • Even less cohesive? -

For Washington, the most concerning addition to the BRICS is Iran, which has hailed membership as a way to break out of US-driven isolation over the clerical state’s contested nuclear work and clampdown on protesters.

But the new members do not see eye to eye. Also joining are three Arab countries with historically rocky ties with Iran – Egypt, Saudi Arabia and the United Arab Emirates.

Tensions also divided the original BRICS. China has a difficult relationship with India, which has been warming to the United States while insisting on “strategic autonomy.”

While the BRICS statement backed reform of the UN Security Council, a major priority for India and Brazil, few expect veto-wielding China and Russia to dilute their power willingly.

Henry Tugendhat, an economist at the US Institute of Peace, said that China in promoting the expansion had inadvertently made the BRICS even less cohesive – more akin to the G20 than the Group of Seven, the club of major industrial democracies that largely share principles.

“What’s striking is that they there are many issues in which they do not align,” he said of the G20.

Conspicuously absent from the BRICS expansion was any Southeast Asian country – despite Indonesia’s leadership in the Cold War-era Non-Aligned Movement – at a time that China has been increasingly assertive on maritime disputes.

Colleen Cottle, a former CIA analyst now at the Atlantic Council, said that for China, BRICS expansion was “more about the rhetoric” of showing that developing countries were rallying to its side, rather than concrete plans to work together.

Still, she said, the BRICS expansion showed the demand for change.

The United States, she said, needs a more effective strategy than its oft-stated insistence on working with “like-minded countries” – but also is unlikely to find success just replicating China’s approach of raw infrastructure spending.

“You need to have the whole package – the articulated long-term vision as well as the concrete funds to back it up,” she said.