Can the dollar lose its world supremacy? What was speculation yesterday took on a concrete diplomatic turn today. As the BRICS summit approaches to Rio, the major emerging economies place local coins transactions at the heart of their strategy. This turn is part of a context of increasing geopolitical tensions and global southern claims for a more balanced financial system. Behind this dynamic is emerging a possible redefinition of the rules of global trade.
In short
- The Summit of the BRICS in Rio (July 6–7) could mark an important step towards an intensification of exchanges in local currencies.
- Several members of the block, including Russia and Brazil, confirm that trade in national currencies is already underway.
- This orientation aims to reduce dependence on the dollar and to strengthen monetary sovereignty of the countries of the Global South.
- The Rio summit confirms a shared desire to act, without imposing a brutal break with the current system.
Trade in local currencies stands out as a diplomatic priority
While the hegemony of the dollar is coming to an end, Denis Alipov, Russian ambassador to India, declared That “the BRICS block is a serious platform to discuss common solutions to major challenges”, at a conference organized in New Delhi by the Brazilian Embassy and the Center for the global prospects of India.
The diplomat confirmed Moscow's commitment in favor of expanding trade in national currencies, noting that this mechanism was already in use between certain members.
He also wanted to dispel the suspicions on an anti-Western Bloc strategy: “The alliance of the BRICS is not a counter-block. It is a center of gravity for countries in search of mutual respect and non-interference ”.
On the Brazilian side, ambassador Kenneth da Nobrega also underlined the effectiveness of this approach: “It's a long way. But, trade in local coins? It already works “.
This strategic orientation aims to strengthen the monetary resilience of member economies in the face of the turbulence of the dollar system. It is integrated into a context of increasing questioning of the world economic order, fueled in particular by American protectionist policies and the persistent threat of extraterritorial sanctions.
As such, several points are clearly emerging from these diplomatic exchanges:
- Trade in local coins is already a reality between certain members of the BRICS, notably between Russia, India and China;
- This dynamic aims to reduce dependence on the dollar in bilateral and multilateral transactions;
- The project is not presented as a confrontation with the West, but rather as a lever of economic emancipation;
- The initiative benefits from a large diplomatic consensus, unlike other more sensitive subjects such as the common currency or the governance of the block;
- The integration of new members such as Iran, Indonesia or the United Arab Emirates reinforces the geoeconomic legitimacy of this strategy.
This coherent positioning, expressed a few weeks before the Rio summit, marks an important step in the financial disintermediation strategy of the BRICS Bloc.
It also opens the way to more technical discussions on the connectivity of local payment systems and the interoperability of national currencies, without crossing the institutional threshold that a common currency would represent.
A common currency? A project still far from reality
If the idea of a single currency within the BRICS has long caused ink, especially in the crypto and economic spheres, the official declarations delivered come to shower in the short term expectations.
“The discussions around a common currency of the BRICS are at a very preliminary stage”said Dammu Ravi, Indian representative of the group and secretary of economic relations. He added: “For the moment, we are only focusing on the regulation of exchanges in national currencies. The harmonization of fiscal and monetary policies is extremely difficult to reach ”. A position that reflects prudence assumed on the part of India, a key country of the block.
There are many technical and political constraints. Monetary alignment requires a long -term macroeconomic convergence, but also institutional coordination that the BRICS, as it stands, does not have.
Brazil recognized it in these terms: “A further integration, such as a common currency, requires years of political alignment”. These words show that ambition exists, but that the feasibility conditions are not yet met. Economic differences between members, in terms of inflation, exchange plan, or political stability, complicate any attempt at monetary standardization. Even within the European Union, the process has taken several decades.
Beyond the monetary issue, reluctance also reflect political lucidity. Precipuous a common currency project could undermine the cohesion of the group. The message sent to Rio is therefore that of gradual cooperation, based on concrete understanding grounds such as localized trade, as evidenced by the transition to local currencies, before possibly approaching a more ambitious monetary union. From a geopolitical point of view, this pragmatic approach could strengthen the legitimacy of the block and avoid internal tensions. Ultimately, technological developments, especially in sovereign digital currencies (CBDC), could relaunch discussions in another form.
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