The BRICS alliance’s ambition to reduce reliance on the US Dollar has sparked debate and concern among financial experts. Some foresee potential disaster, while others remain cautiously optimistic. Zimbabwe’s former finance minister, Tendai Biti, falls into the former camp, warning against embracing the BRICS’ plan. Biti believes that for Zimbabwe, considering a spot in the BRICS lineup, such a move could lead to economic crisis, particularly given the country’s past struggles with its own currency.
Biti’s apprehension reflects broader concerns about the risks associated with abandoning the Dollar, especially for smaller economies. While the BRICS nations may have the resources to weather the transition, smaller nations like Zimbabwe could face significant challenges. Biti acknowledges the support provided by institutions like the BRICS New Development Bank but cautions against overlooking the potential downsides of forsaking the Dollar. Ultimately, Biti’s stance underscores the complexities and uncertainties surrounding the BRICS alliance’s efforts to reshape the global financial landscape.
The prospect of smaller nations aligning themselves with the BRICS alliance’s de-dollarization efforts carries significant risks. Without the safety net provided by the US Dollar, transitioning to a world dominated by BRICS currencies could be premature and disruptive to global trade, which has long relied on the Dollar.
To bolster its push for de-dollarization, the BRICS alliance is reportedly developing a new payment system powered by blockchain technology. This system aims to provide a more efficient and apolitical alternative to existing payment systems, free from reliance on the Dollar. However, specific details about the system remain scarce.
Brazil’s President Luiz Inacio Lula da Silva has been vocal in advocating for a BRICS currency, seeking to diversify trade and investment transactions away from the Dollar. Already, notable agreements have been made between countries within the alliance to conduct trade using their own currencies, bypassing the Dollar entirely.
Anil Sooklal, representing South Africa within the BRICS bloc, has expressed confidence in the decline of the Dollar’s global dominance. He envisions a future characterized by a multipolar global trading system, with the BRICS alliance playing a leading role in reshaping the international financial landscape. As the BRICS alliance expands and strengthens its economic influence, its efforts toward de-dollarization could indeed herald a new era in global finance.