Kazan, the capital of the Republic of Tatarstan, Russia, will host the BRICS Summit from the 22nd to the 24th of October, marking the highlight of Russia’s chairmanship of BRICS in 2024.
This summit is particularly significant as it will be the first meeting of the group since its expansion. Russia, holding the rotating BRICS presidency in 2024, will prioritise strengthening cooperation across political, security, economic, financial, and cultural sectors among member countries. The discussions are expected to focus on topics such as international governance reform, the de-dollarisation of trade, and enhanced multilateral cooperation between BRICS nations, including newly admitted members.
The summit in Kazan aims to address key global challenges and push for a larger role for BRICS nations in shaping the global economic and political order, especially in reducing reliance on Western-led financial systems.
As of the previous summit, the BRICS bloc has expanded to include six new member countries, bringing the total to 11. The founding nations are Brazil, Russia, India, and China, with South Africa joining in 2010. In 2024, BRICS invited Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE) to become members. Additionally, 30 more countries have expressed interest in joining the group.
This expansion reflects BRICS’ ambition to increase its global influence, particularly by including major emerging economies from various regions and fostering stronger geopolitical and economic cooperation.
In a significant shift for global finance, the finance ministers of BRICS nations—Brazil, Russia, India, China, and South Africa—recently gathered in Moscow to discuss the future of international economic cooperation after each member signed agreements to move away from the US dollar as the dominant currency in international trade. This meeting marks a milestone in the bloc’s ongoing efforts to challenge the global financial system’s dependence on the dollar and to promote the use of their own currencies in bilateral trade. The BRICS bloc, representing over 40% of the world’s population and a growing share of the global economy, has long sought to reduce its reliance on the US dollar. The agreements signed by the finance ministers demonstrate a collective commitment to de-dollarisation, a process aimed at diminishing the dollar’s dominance in global trade and financial transactions. The BRICS nations’ strategic foresight is notable, as it showcases their long-term planning and dedication to reshaping the global financial system.
Over the years, BRICS countries have become increasingly frustrated with the dollar-centric global financial system, which they argue is vulnerable to US monetary policy, sanctions, and geopolitical decisions. The sanctions placed on Russia following its invasion of Ukraine, for example, highlighted the risks for countries that rely heavily on the dollar and may face political tensions with the West.
In recent months, the group has made concrete steps to develop alternative financial instruments, increase the use of national currencies in trade, and bolster central bank cooperation. The BRICS New Development Bank (NDB) is central to these efforts, aiming to fund infrastructure and sustainable development projects in member nations while exploring alternatives to dollar-denominated loans. By providing an alternative source of funding in local currencies, the NDB plays a key role in the de-dollarisation process.
The Kazan summit will be the culmination of these efforts, with finance ministers focused on various topics including trade, investment, and financial cooperation. However, de-dollarisation remains the central theme of the discussions. By signing the de-dollarisation agreements, BRICS countries have set the stage for a future where international trade, energy contracts, and even cross-border financial flows may increasingly be conducted in local currencies, such as the Chinese yuan, Indian rupee, Russian rouble, and Brazilian real.
One of the primary strategies discussed at the last meeting in Moscow was establishing currency swap lines between BRICS central banks, allowing them to settle trade transactions in local currencies without the need for dollar-based exchanges. Additionally, there are discussions of expanding the role of the BRICS Contingent Reserve Arrangement (CRA), which serves as a financial safety net for member nations during liquidity crises—again, reducing dependence on the US dollar.
BRICS’ move towards de-dollarisation could have significant implications for the global economy. The US dollar has long been the world’s reserve currency, granting the United States substantial influence over global financial markets. For decades, countries have relied on the dollar for trade settlements, investments, and foreign exchange reserves.
Should BRICS successfully implement its de-dollarisation agenda, it could weaken the dollar’s status as the primary global reserve currency. The shift may also encourage other countries, particularly emerging economies, to adopt similar measures, further diversifying the international monetary system.
Critics, however, argue that the transition away from the dollar will be complex and lengthy. Many BRICS countries still hold significant portions of their foreign reserves in dollars, and dollar-denominated assets remain deeply embedded in global financial markets. Nevertheless, the commitment of BRICS nations to reducing their dollar reliance is inspiring, as it signals a growing desire to reshape the current financial order and demonstrates their resilience in the face of challenges.
The de-dollarisation initiative by BRICS also reflects a broader geopolitical realignment. As global power dynamics shift, countries like China and Russia have grown more assertive in challenging Western-led institutions. By fostering greater financial independence from the dollar, BRICS nations aim to insulate themselves from the economic fallout of US sanctions and political decisions.
This sentiment was echoed at the Moscow meeting, where ministers emphasised the need for economic sovereignty and resilience. For Russia, which has been targeted by sweeping sanctions from the US and Europe, the de-dollarisation push is not only a financial move but also a strategic necessity. By reducing their reliance on the dollar, BRICS nations aim to gain greater control over their own economic policies and stability.
The previous BRICS meeting in Moscow was a pivotal moment in the global financial landscape. While the road to de-dollarisation is likely to be fraught with challenges, the agreements signed by BRICS finance ministers demonstrate their shared commitment to building a multipolar monetary system that reflects the bloc’s growing influence. This shift towards a multipolar system could create a more balanced and resilient global financial landscape, offering hope for the future of international trade and finance.
For now, the US dollar remains dominant. However, the actions of BRICS nations clearly indicate that the era of unchallenged dollar hegemony may be approaching its end. As these countries continue collaborating on de-dollarisation, the global financial system may witness a gradual but profound transformation that could reshape the future of international trade and finance.
https://brics-russia2024.ru/en/summit/
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