Brazil to Bring Up De-Dollarization at 15th BRICS Summit

Brazil intends to raise the issue of abandoning the dollar in nation-to-nation settlements at the upcoming BRICS summit, the country's President Luiz Inacio Lula da Silva announced on Friday during a summit on the new global financial pact held in Paris.

During his official visit to China in April this year, the Brazilian president criticized the usage of the US dollar in global commerce, arguing that nations could use their own currencies instead.

"Why should every country have to be tied to the dollar for trade?... Who decided the dollar would be the (world's) currency?" Lula da Silva said. "Why can't a bank like the BRICS bank have a currency to finance trade between Brazil and China, between Brazil and other BRICS countries? Today, countries have to chase after dollars to export, when they could be exporting in their own currencies."

In March this year, China and Brazil agreed to payments in yuan, allowing for settlements without the use of the US currency, as well as loans in national currencies, in order to simplify and reduce the cost of transactions, as well as to eliminate reliance on the greenback in their bilateral relations.

Opinion

How BRICS Can Dethrone Dollar Dominance: Expert Sizes Up Multipolar Monetary System

18 April 2023, 10:12

According to economist Richard Wolff, the US dollar's loss of dominance as the world's reserve and trade currency is directly connected to the BRICS expansion.

"The BRICS now account for 33%, one third of the total output of goods and services on this planet, whereas the United States and its allies have slipped to under 30%, about 29% of total output," he stated.

As a part of efforts to decrease the dependence on the US currency in nation-to-nation trade, in 2018, Russia's Valdai Discussion Club first floated the notion of establishing a unified BRICS currency. Based on the names of the BRICS currencies, which all start with the letter R: real, ruble, rupee, renminbi, and rand, it was suggested that the new reserve currency be called "R5".

Recently, Ashraf Patel, a senior research associate with the Institute for Global Dialogue and a member of the South Africa BRICS Think-Tank Network, told Sputnik Africa that the prospect of a single BRICS currency raises high hopes in light of the "unsustainability" of the US domestic financial system.

"BRICS has potential to provide ‘broad-based economic stability ’in world affairs, while simultaneously creating alternative platforms in key areas, one being the BRICS reserve currency. Many mechanisms exist in a geopolitical world order. And BRICS reserve currency is the most promising possibility," Patel said.