Brics bloc slows down

DE-DOLLARISATION: BACKDOWN ON PLAN TO DITCH THE GREENBACK

- Adriaan Kruger

Member countries of the Brics trading bloc seem to have backed down from their rather lofty ideal of establishing their own currency to counter the dominance of the US dollar and the euro, choosing to focus on growing cross-border trade in national currencies - for now.

Commentators say current economic and geopolitical uncertainties may have contributed to the cautious approach while US President Donald Trump's trade war certainly led to it by pitting the US against everyone else.

Although the creation of a Brics currency featured prominently at the 2024 Brics Summit in Kazan, Russia, it has become clear that ambitions for an immediate launch have cooled.

Russian President Vladimir Putin, who led the charge for de-dollarisation, appeared on stage at the summit holding what seemed to be a prototype Brics banknote, dubbed the Unit.

Now even Putin has softened his tone, stating that the bloc's goal was not to break away from the US-dominated SWIFT (Society for Worldwide Interbank Financial Telecommunications) financial system entirely, but rather to reduce the dollar's "weaponisation" and promote the use of local currencies for trade between the Brics members.

Since discussions around a new global reserve currency began in earnest during the 14th Brics Summit in 2022, progress has largely been rhetorical.

Putin then said the Brics countries were ready to issue a new reserve currency backed by a basket of Brics currencies.

Brazil's President Luiz Inacio Lula da Silva echoed this vision in 2023, but hopes of a major announcement at that year's summit failed to materialise.

The latest summit, held this month in Rio de Janeiro, took a more measured tone.