BRICS to extend each other credit in local currencies lessening dollar dependency
Brazil, Russia, India, China and South Africa (BRICS) will now provide credit in local currencies. This will not only facilitate growth in trade but it will also lessen dependence on the U.S. dollar as the medium for trade.
The chief economist at Deutsche Bank said:" The idea is in line with many interests and economic exigencies in the world economy,” “The euro and dollar are no longer seen as unquestionable monopolies in the role of reserve currencies. Clearly the world needs more reserve currencies.” The BRICS are moving away from too much dependence upon standard exchange currencies such as the dollar and euro. Not only will such a move increase the BRICS influence but if the West tries to impose sanctions on them for whatever reason trade will go on.
The trend towards using new currencies in trade has been developing for some time. China and Russia use the rouble and yuan in their trading relationships and have been for several years. Russia is now planning to develop a similar deal with India.
The BRICS are also contemplating a development bank that could provide an alternative to the World Bank and the IMF. It would function as a lending agency for joint BRICS projects. For more see this article.