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- BRICS takes a similar stance as the ASEAN bloc by ditching the US Dollar while they consider a common currency for international trade.
- Bitcoin is rumored to be under consideration since it offers diversification from the US Dollar.
The shifting away from the US Dollar has been a topic of discussion lately and it is often heard in the same conversation as the BRICS. Since the end of World War 2, the US Dollar has dominated international trade and has been the world’s main reserve currency. However, using it as a weapon to impose sanctions has forced developing countries to find alternatives. This has been confirmed by Shirley Ze Yu, a senior visiting fellow at the London School of Economics.
As the US weaponizes the dollar in the Russian and Iran sanctions, there is increasing desire by other developing countries to seek alternative currencies for trade, investment, and reserves, as well as developing alternative multilateral clearance systems outside of SWIFT.
In the recent BRICS summit in Johannesburg that had the presidents of China, India, South Korea, Brazil, etc. in attendance, Russian President Vladimir Putin stated emphatically that the “process of de-dollarization is gaining space and is irreversible.”
This official statement means that two different alliances have so far agreed to move away from the dollar. It can be recalled that the ASEAN bloc in March 2023 concluded to not use the US Dollar for international trade. Instead, they agreed to use their local currencies, a declaration that was signed by leaders of 10 Southeast Asian nations.
BRICS Takes the Same Position
Similar to the ASEAN bloc, BRICS has in the just-ended summit agreed to ditch the US Dollar in international trade and resort to their local currencies. On top of that, they are working to arrive at a common currency for member nations.
With the trade expected to be done within the existing membership nations, 11 BRICS member groups and 10 countries of the ASEAN group would no longer use the dollar. The successful implementation of this could affect 10 financial sectors in the US including banking, tourism, trade, etc. according to analysts.
No official mention has been made of the consideration of Bitcoin as an alternative currency. However, the digital asset is rumored to be a top alternative in this de-dollarization process since it offers diversification from the US Dollar when held as a reserve currency.
On top of that, it exists as a more efficient financial system due to its reliance on blockchain technology. Also, it eliminates third parties in transactions making settlements faster and cheaper. One interesting merit of Bitcoin over the US Dollar is its transparency. All transactions are recorded on the public blockchain, hence, helps in eliminating corruption while enhancing accountability.
The rumors of possible Bitcoin adoption by the BRICS stem from a recent report that Russia plans to use cryptos to settle international trade.
This was stated by Elvira Nabiullina, the head of the Bank of Russia:
We adhere to the same position that, within the country, cryptocurrency (…) should not be used. As for foreign payments, we assume that this is possible in the form of an experiment. This bill is also being prepared as a kind of an experimental legal regime.
