The recent BRICS summit in South Africa heralded significant changes, most notably the planned inclusion of six new member countries by January 2024: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE), which makes BRICS even more diverse in its representation. The summit, however, did not reveal any indications of adopting a digital currency.
South African President Cyril Ramaphosa voiced concerns over the global financial system: “We are concerned that global financial and payment systems are increasingly being used as instruments of geopolitical contestation.” He emphasized the necessity for reliable global payment systems for “the smooth operating of banking, supply chains, trade, tourism as well as financial flows.”
One notable commitment from the summit was the Johannesburg II declaration, promoting the use of local currencies for trade between BRICS nations and their trading partners. As specified in the declaration, “We task our Finance Ministers and/or Central Bank Governors, as appropriate, to consider the issue of local currencies, payment instruments and platforms and report back to us by the next Summit.”
China and the UAE are ahead of the curve, already involved in the MBridge platform for digital currency cross-border payments, facilitated by the Bank of International Settlements. Rumors also abound about a potential digital currency collaboration between Russia and Iran.
This trend isn’t limited to BRICS nations. Several other countries have been moving away from the dollar for cross-border trade. As evidence, India and the UAE are exploring cross-border CBDC initiatives, while also amplifying their reliance on local currencies. Additionally, the Reserve Bank of India is pushing for the use of rupees and dirhams in India-UAE trades.
Outside of BRICS, Indonesia, Malaysia, and Thailand’s central banks announced their intention to conduct trades in local currencies, though similar agreements were previously made in 2015.
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Jack McPherrin ([email protected]) is a managing editor of StoppingSocialism.com, research editor for The Heartland Institute, and a research fellow for Heartland's Socialism Research Center. He holds an MA in International Affairs from Loyola University-Chicago, and a dual BA in Economics and History from Boston College.