BRICS and De-Dollarisation
The BRICS grouping, comprising Brazil, Russia, India, China, and South Africa, has been targeted by the US administration under President Donald Trump concerning its de-dollarisation efforts. Trump's administration threatened a 100% tariff if BRICS pursued alternative currencies to the dollar.
Expansion and Economic Influence
BRICS expanded in 2024 by including the UAE, Egypt, Ethiopia, and Iran, followed by Indonesia in 2025, forming BRICS+. This expansion increased the group's global influence, accounting for:
- 55% of the global population
- 40% of global GDP at purchasing power parity (PPP)
- Almost 25% of global merchandise exports
Challenges in Achieving Objectives
BRICS+ aims to foster financial and trade cooperation through a cross-border payment system using local currencies. However, several challenges include:
- Diverse political systems and economic development levels among member countries
- Global dominance of the dollar in forex reserves and international trade
- Potential risks to relationships with the US, especially for China and India
- Contradictions with desires for greater representation in existing international financial institutions
New Financial Structures
Despite challenges, BRICS member countries are developing financial infrastructures:
- China's RMB clearing licenses and inclusion in special drawing rights (SDRs)
- India's MOUs with countries like the UAE and Malaysia for trade in local currencies
- Development of digital payment systems by major BRICS economies, including digital wallet technology and QR code systems
Regional Trends and Use of RMB
Global use of RMB remains small but is significant in regions with intense trade with China, such as Asia, Latin America, and Africa. For example, Argentina used China's Central Bank swap line to settle part of its debt with the IMF in 2023.
Future Developments
BRICS+ aims to develop a cross-border payment system as a risk diversification strategy amidst global economic uncertainties. The technological and regulatory challenges in aligning national payment systems remain significant.
