The BRICS nations are actively pursuing a de-dollarization initiative with notable momentum, aimed at dismantling the prevailing U.S. dollar-centric financial framework. since its expansion to encompass ten nations in August 2023, the BRICS alliance has consistently engaged in transactions using local currencies and has undertaken initiatives towards the creation of a unified BRICS currency, intending to reduce the prominence of the U.S. dollar in global financial markets. Presently, BRICS countries are advancing further by formalizing multiple agreements to completely eschew the utilization of the U.S. dollar.
The pioneer nations of the BRICS namely Russia and China, have emerged as primary actors in the ongoing process of de-dollarization, exemplified by their mutual commitment to multiple agreements conducted in local currencies. Russian Prime Minister Mikhail Mishustin has underscored the flourishing nature of business ties between these nations, noting that bilateral trade turnover has already surpassed the $200 billion mark ahead of the stipulated schedule. Concurrently, the US Dollar has sustained a protracted 20-year decline, a trend attributed in part to the collective endeavors of the BRICS nations to diminish reliance on the dollar, thereby challenging its position as a global reserve currency and altering international sentiment.
In a noteworthy development, at least 16 additional countries have expressed a keen interest in affiliating with BRICS, signaling a growing inclination to disentangle from the US Dollar. This collective move not only serves to weaken the USD’s financial system and influence but also poses a formidable challenge to its status as a global reserve currency. The anticipation of a potential BRICS currency materializing in 2024 adds another layer to the de-dollarization narrative. Throughout the preceding year, 2023, discussions surrounding the prospective BRICS currency gained prominence, intertwining with the broader de-dollarization initiatives undertaken by the alliance and prospective entrants.
IS De Dollarization an Achievable Target by 2024:
Nations worldwide are exploring strategies to diminish their dependence on the US Dollar, potentially positioning BRICS (Brazil, Russia, India, China, and South Africa) as enablers of de-dollarization. Nevertheless, the realization of such an endeavour remains a formidable challenge. The US currency has enjoyed unparalleled dominance in international trade for an extended period, and the emergence of a rival force, exemplified by the BRICS alliance, poses an unprecedented threat. The prospect of dislodging the US dollar as the preeminent global reserve currency necessitates considerable concerted efforts. Additionally, the enduring global support for the US dollar and the United States at large surpasses that afforded to the BRICS collective, underscoring the magnitude of the undertaking required for a comprehensive shift in the prevailing financial paradigm.
The BRICS has the potential to amplify the perspectives of developing nations, thereby cultivating broader backing for challenging the prevailing dominance of the US Dollar in the global financial system. Should these nations align with BRICS in 2024 and endorse the utilization of BRICS currencies or local currencies in trade, it could pose a significant challenge to the supremacy of the US Dollar. However, it is essential to acknowledge that substantial efforts and strategic initiatives are requisite for BRICS to successfully navigate and influence such a transformation in the international financial landscape.
