BRICS Nations Collaborate To Replace Dollar In Foreign Trade

Key Points:

• BRICS countries are developing a new currency to replace the US dollar in foreign trade.
• Countries use local currencies in bilateral trade to avoid settling trade operations in a third currency.
• China’s local currency is surging, with receipts surpassing the US dollar in cross-border transactions.

BRICS nations are considering the creation of a new currency for trading among themselves, according to Brazil’s President Luiz Inácio Lula da Silva.

Brazil, Russia, India, China, and South Africa are collaborating on developing this new currency, which would replace the US dollar in foreign trade. The nations involved plan to discuss their ideas during the upcoming BRICS summit in South Africa.

Lula has called on the BRICS nations to create an alternative to the dollar that can finance trade relations between Brazil, China, and other BRICS countries.

Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries? Who decided that the dollar was the (trade) currency after the end of gold parity?

Lula asked

Brazil’s Finance Minister Fernando Haddad has stated that countries are using local currencies in bilateral trade to avoid being forced to settle trade operations in a currency not involved in the transaction. This expands mechanisms that allow trade operations to be settled without a third currency.

China’s local currency has seen a surge in recent years, with receipts surpassing the US dollar in Chinese cross-border transactions. The dollar’s share has decreased from 83% to 47% over the same time frame. Many, including former US President Donald Trump, believe that China’s yuan will eventually become the world’s primary currency. As a result, several countries are moving away from the US dollar.

Lula also stated that his government will not privatize any public company. He has called for an expansion of the UN Security Council’s permanent members during a trip to Spain.

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