
An op-ed published on Business Insider by writer Huileng Tan delves into efforts led by the BRICS group in advocating for a move away from US dollar dominance.
Last year, Brazilian President Luiz Inácio Lula da Silva proposed a common BRICS currency, though this idea faced skepticism from economists.
The practicality of establishing a common currency is challenging; instead, the bloc has focused on increasing trade and lending in local currencies to diminish reliance on the dollar.
Christopher Granville, managing director of global political research at GlobalData TS Lombard, suggested that discussions on reducing dollar dependence might gain momentum during the BRICS summit in Kazan, Russia, scheduled for October 22-24.
This comes amid rising tensions between the US and China, and secondary sanctions by Washington on banks processing payments involving Russia, even in local currencies like the Chinese yuan.
A significant development in this context is the interest of central banks in digital-currency transfers. Granville noted that a potential systemic solution involves a platform from the Bank for International Settlements (BIS) that facilitates direct, peer-to-peer settlements of commercial invoices and foreign-exchange trades using central-bank digital currencies (CBDCs).
These currencies are akin to cryptocurrencies but are issued and backed by central banks. In 2022, central banks from China, Hong Kong, the UAE, and Thailand participated in a BIS trial of this system, although it is not yet operational.
Business Insider