The BRICS nations are poised to challenge the dominant position of the U.S. dollar as they converge in Cape Town on June 2-3 to discuss de-dollarization and potential expansion. With 19 countries expressing interest in joining the bloc, including Algeria, Argentina, Egypt, Iran, Mexico, Saudi Arabia, Turkey, and several African countries, the rapid expansion could signal a shift away from Western supremacy. If the dollar is no longer used for foreign trade, U.S. sanctions may lose their impact, potentially changing the global economic landscape. To learn more continue reading the latest edition of our traders digest. BRICS New Development Bank Breaks Away From US Dollar The New Development Bank (NDB), established by the BRICS group, is taking a bold step away from the U.S. dollar in international trade, as confirmed by NDB President Dilma Rousseff. The bank plans to provide 30% of its loans in the local currencies of its member nations, challenging the dominance of the U.S. dollar and reducing dependency on it. Rousseff, who took over the NDB leadership in March 2023 after serving as Brazil’s president from 2011 to 2016, believes that utilizing local currencies is crucial in avoiding foreign exchange risks and financial shortages that can hinder long-term investments. In an interview with Chinese media outlet CGTN, Rousseff shared her vision for the NDB’s currency strategy, stating, «It is necessary to find ways to avoid foreign exchange risk and other issues such as being dependent on a single currency, such as the U.S. dollar.» Under this initiative, the NDB will commit 30% of its loan book to be financed in the currencies of BRICS member countries, including Brazil, Russia, India, China, and South Africa. Rousseff highlighted China and Brazil as examples of countries that have already embraced trading in their respective currencies, the Chinese yuan and the Brazilian real. The BRICS members, characterized as industrialized developing countries with large and emerging economies, represent over half of the world’s population. With a combined gross domestic product of $13.6 trillion and foreign exchange reserves totaling $4 trillion, the bloc’s wealth and power are on the rise. In response to the West’s frequent use of sanctions as an economic weapon, BRICS is taking steps to establish its own financial institutions, challenging the dominance of institutions like the World Bank and the International Monetary Fund. This move has garnered significant interest from countries facing sanctions, such as Iran and Turkey, who have submitted membership applications.
The admission of new members into BRICS will further enhance the prestige and influence of the bloc, making it a formidable economic force for countries seeking independence from Western hegemony. To facilitate this process, the New Development Bank was established by BRICS as a counterweight to the International Monetary Fund and the World Bank, underscoring the bloc’s determination to assert its financial autonomy and promote economic cooperation among its members.