BRICS Summit Unveils Plans for New Currency and De-Dollarization Efforts

The ongoing BRICS summit in Kazan, Russia, has seen significant discussions and unveilings related to the group’s efforts to de-dollarize and introduce a new currency. Russian President Vladimir Putin, who is hosting the summit, has been a key proponent of reducing reliance on the US dollar and promoting the use of local currencies among BRICS member countries.

A mock-up of the proposed BRICS currency was unveiled during the summit, with Putin being presented with a symbolic ‘BRICS bill’. The currency note features the flags of the founding BRICS nations – Brazil, Russia, India, China, and South Africa – and is expected to be backed by 40% gold and 60% reserves in member currencies.

Despite the unveiling, the head of Russia’s Central Bank, Elvira Nabiullina, has expressed reservations about the idea of a single BRICS currency. Instead, the focus remains on increasing the use of local currencies in trade and reducing dependence on the US dollar. For instance, nearly 95% of trade between Russia and China is now conducted in rubles and yuan.

The BRICS group is also working on an alternative global payment system to circumvent the US-dominated financial infrastructure, such as the SWIFT payment network. Chinese President Xi Jinping emphasized the need for reform in the international financial architecture and highlighted the importance of BRICS in promoting a new system that reflects the changing global economic balance of power.

The summit has seen participation from over 20 world leaders, including Indian Prime Minister Narendra Modi, Chinese Premier Xi Jinping, and South African President Cyril Ramaphosa. The expanded BRICS membership now includes Egypt, Ethiopia, Iran, and the United Arab Emirates, with Saudi Arabia invited but not yet formally joined.

However, the de-dollarization efforts and the introduction of a new currency face several challenges. For example, foreign attendees at the summit were advised to bring US dollars and euros due to the limited acceptance of other currencies in Russia. This underscores the significant hurdles in moving away from the US dollar’s dominance in global finance.