BRICS Nations Advocate for Enhanced Local Currency Role in Global Trade and Finance

B. Ali
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The BRICS leaders recently gathered in the vibrant city of Johannesburg, South Africa, with a mission to explore strategies aimed at diminishing their dependence on the US dollar in global trade and finance. They believe that using local currencies would help to reduce the risk of currency fluctuations and promote economic independence.

It is worth recalling that the BRICS nations, which include Brazil, Russia, India, China, and South Africa, recently concluded their 15th annual summit held in Johannesburg. They talked about working together for growth, development, and fairness. They said they wanted to make it easier and cheaper for their countries to do business together and with others.

In addition to this, they expressed a desire to use their own currencies more in international trade and finance, which could benefit everyone involved. Moreover, they aimed to simplify the process for their banks to cooperate with one another.

Moreover, the leaders assigned the responsibility to their finance ministers and central bank governors to delve deeper into this matter. They want them to explore and create fresh payment methods and platforms that would make using local currencies in global transactions much smoother. They asked their finance ministers and central bank leaders to think about how to do this and tell them at the next meeting.

Hence, this was seen as a significant development, as it could mark a shift away from the US dollar’s dominance in the global financial system. It’s important to recognize the significance of this move because the BRICS countries together represent more than 40% of the world’s population and a substantial 25% of the global economy. If they effectively encourage the use of their own currencies, it has the potential to exert a substantial influence on the global economy.

Benefits of Using Local Currencies in International Trade and Finance

If we delve into the benefits of using local currencies in international trade and finance, there are several potential benefits to using local currencies in international trade and finance. First, it would reduce the risk of currency fluctuations. When businesses and investors transact in foreign currencies, they are exposed to the risk that the value of those currencies could change in the future.

This can potentially result in financial losses if the currency they hold loses its value. However, by employing local currencies, this particular risk factor would be completely eliminated.

Another significant benefit is the enhancement of economic independence that arises from using local currencies. When businesses and investors transact in US dollars, they are effectively handing over control of their finances to the US government. This is because the US government has the power to print dollars and to influence the value of the dollar through its monetary policy. Using local currencies would give businesses and investors more control over their finances.

However, the BRICS leaders’ plan to encourage the use of local currencies is certainly a bold move. While its success remains uncertain, it undeniably carries the potential for a substantial impact on the global economy.

Russia’s Chairmanship and New Summit Location

As we mentioned above the BRICS leaders met in South Africa to discuss several important issues. They agreed that Russia will be the chair of BRICS in 2024 and will host the summit in Kazan. Moreover, they acknowledged and emphasized the significance of the New Development Bank in driving forward infrastructure and sustainable development projects across the BRICS countries.

In addition to this, the BRICS leaders invited six countries to become new members of BRICS: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. They also tasked their foreign ministers to develop a list of prospective partner countries and report back at the next summit.

Thereby, BRICS leaders’ decisions hold considerable significance for the global economy. Meanwhile, Russia’s chairmanship of BRICS in 2024 will give the country a greater role in shaping the bloc’s agenda. However, the New Development Bank’s focus on infrastructure and sustainable development is also important, as these are key areas for growth in BRICS countries.

It is also worth mentioning that the invitation of six new countries to join BRICS is a major expansion of the bloc. This could lead to increased trade and investment between BRICS countries and their new members. Plus, the BRICS leaders’ decision to task their foreign ministers with developing a list of prospective partner countries is also significant, as it could lead to further expansion of the bloc in the future.

Therefore, the BRICS leaders’ decisions at the summit in South Africa are a positive step for the global economy. They could lead to increased trade and investment, as well as greater cooperation between BRICS countries and their partners.

About B. Ali PRO INVESTOR

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