The recent BRICS (Brazil, Russia, India, China, and South Africa) convention has once again catapulted the alliance into the international spotlight. BRICS represents a formidable economic and political force that is reshaping the global landscape. A key topic of discussion at this year’s convention was the possible replacement of the U.S. dollar as the world’s primary international trade currency. It’s important to examine the implications of this discussion in the context of the convention and the evolving dynamics within BRICS.

The BRICS convention in Aug. 2023 was marked by a strong sense of unity and purpose among its member states. With its diverse and dynamic economies, the alliance is gaining increasing importance in international affairs. The convention provided a platform for these countries to discuss various economic and geopolitical issues, including their collective stance on the role of the U.S. dollar in international trade.

For decades, the U.S. dollar has been the world’s primary reserve currency, used in international trade and finance. This has given the United States significant influence over global economic affairs. However, recent economic and political developments have raised concerns among BRICS nations about the dollar’s dominance.

One of the key outcomes of the BRICS convention was a renewed commitment among member states to diversify their foreign exchange reserves and reduce their reliance on the U.S. dollar. This move is driven by several factors:

1. Geopolitical Uncertainty: The global geopolitical landscape has become increasingly unpredictable. BRICS countries are concerned about the potential use of economic sanctions by the United States, which can disrupt their trade and financial systems.
2. Currency Risk Mitigation: By reducing their dependence on the dollar, BRICS nations can mitigate the currency risk associated with fluctuations in the dollar’s value.
3. Economic Sovereignty: BRICS countries are eager to assert their economic sovereignty and reduce their vulnerability to external economic pressures.

China and Russia have been at the forefront of efforts to reduce the dollar’s dominance in international trade. Both countries have been actively promoting their national currencies, the yuan and the ruble, as viable alternatives to the dollar. China’s Belt and Road Initiative has also been a catalyst in expanding the international use of the yuan.

At the convention, China and Russia emphasized their commitment to further strengthening their bilateral economic ties and increasing the use of their own currencies in trade settlements. This move has the potential to pave the way for the dollar’s decline in global trade.

India and South Africa, while supportive of efforts to reduce dollar dominance, have been more cautious in their approach. They recognize the practical challenges associated with replacing the dollar and the importance of a gradual transition.

For India, a significant portion of its foreign trade is conducted in dollars, making a swift shift to alternative currencies challenging. However, India has expressed its willingness to explore regional currency arrangements within BRICS and promote the use of the Indian rupee in intra-BRICS trade.

South Africa, on the other hand, sees the potential benefits of diversifying its foreign exchange reserves but is also mindful of the existing financial infrastructure tied to the dollar.

While BRICS countries have varying levels of commitment and approaches, their collective efforts signal a shift in the global economic landscape. As China and Russia push for the internationalization of their currencies, and India and South Africa cautiously explore alternatives, the dollar’s role in international trade may indeed be on the path to transformation.