The BRICS group of emerging economies (Brazil, Russia, India, China and South Africa) is looking to expand its membership and pursue de-dollarization strategies to reduce its exposure to the US dollar and US sanctions. The group, which represents about 40% of the world’s population and 25% of global GDP, has been developing various initiatives to enhance its financial and geopolitical autonomy and influence.
One of the initiatives is the New Development Bank (NDB), which was established by BRICS in 2014 as an alternative to the World Bank and the International Monetary Fund. The NDB provides loans and grants for infrastructure and sustainable development projects in BRICS and other developing countries. The NDB has recently approved the admission of three new members: Bangladesh, United Arab Emirates and Uruguay. The bank plans to expand its membership to 20 countries by 2022.
Another initiative is the Contingent Reserve Arrangement (CRA), which was launched by BRICS in 2015 as a safety net for its members in case of balance of payments crises. The CRA allows BRICS countries to access up to $100 billion in emergency liquidity from each other, without having to rely on the US dollar or the IMF. The CRA also aims to promote regional monetary cooperation and financial stability.
A third initiative is the Local Currency Bond Fund (LCBF), which was created by BRICS in 2018 as a platform for investing in local currency bonds issued by BRICS and other emerging markets. The LCBF seeks to diversify the sources of funding for BRICS countries, reduce their dependence on foreign currency debt, and foster the development of local bond markets.
These de-dollarization initiatives are part of a broader trend of rising power coalitions seeking to challenge the dominance of the US dollar in the global financial system. China, for instance, has been promoting the internationalization of its currency, the renminbi, through various bilateral and multilateral arrangements. China has also been leading the Shanghai Cooperation Organization (SCO), a regional security bloc that includes Russia, India, Pakistan and several Central Asian countries.
BRICS is an important actor in the global financial system, with a potential to reshape it in a more multipolar and diversified way. However, it still has a long way to go before it can achieve its de-dollarization goals and aspirations.