The dollar reigns over international trade, but its monopoly is wavering. Faced with geopolitical tensions and Western sanctions, the BRICS are accelerating their strategy to free themselves from them. The bloc is now working on a system of payments in local currencies, capable of profoundly transforming global trade flows. Behind this initiative, a clear ambition: to reduce the financial influence of the West and to reshape monetary balances on a global scale.
In brief
- The BRICS are studying the establishment of a system of payments in local currencies to reduce their dependence on the dollar.
- The project aims to circumvent Western sanctions and strengthen the bloc's financial autonomy.
- Transactions in local currencies would reduce costs associated with foreign exchange fees.
- The system could work with near-instantaneous payments between member countries.
Towards a BRICS payment system independent of the dollar
The BRICS are currently evaluating the establishment of an intra-currency payments system intended to reduce their dependence on the US dollar. This project takes place in a context of geopolitical tensions and economic sanctions.
Geeta Kochhar, professor at the Center for Chinese Studies in New Delhi, describe this mechanism like “a strategic tool aimed at guarding against Western economic influence”specifying that it would allow payments “near real time”even in the event of dollar volatility.
This device is based on several elements structuring elements which reflect a clear desire to transform international trade:
- A payment system directly linking the local currencies of member countries;
- An alternative to the dollar, considered the most expensive in terms of exchange fees;
- A settlement channel whose viability depends on the clearing rate;
- A reduction in exposure to Western economic sanctions.
The stated objective is to streamline exchanges between members while limiting their dependence on financial infrastructures dominated by the West.
A global ambition driven by the economic weight of the alliance
Beyond the simple payment infrastructure, the project is part of a broader strategy aimed at strengthening the role of local currencies in international trade. The yuan, ruble and rupee could thus gain importance in intra-BRICS trade, supported by the growing volume of transactions between these economies.
Geeta Kochhar emphasizes that this system would function as a “safety net”making it possible to secure the supply of essential goods while reducing costs thanks to lower exchange fees. It also specifies that these exchanges could “circumvent Western financial restrictions”thus strengthening the economic autonomy of the bloc.
The potential impact of this initiative takes on a particular dimension when we observe the economic weight of the BRICS in certain key sectors. The alliance accounts for nearly 42% of global oil production and about 40% of grain.
In this context, the possible use of the intra-currency system for energy payments could cause major adjustments in international markets. Kochhar discusses the ability of BRICS to “shape the management of local currencies thanks to their economic weight”emphasizing that their influence could extend far beyond their borders.
This project thus opens the way to a rebalancing of the global financial system, where several centers of power would coexist. Such a development could reduce the dollar's hold on international trade, while accelerating the emergence of new payment infrastructures. It remains to be seen whether this dynamic will last over time and whether it will succeed in imposing itself in the face of the mechanisms already in place, deeply anchored in the global economy.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
