- The Brazilian presidency will not have pressure for the common currency this year.
- July BRICS SUMMIT to discuss cross -border payment initiatives.
- Focus on the softening of international payments, reducing dependence on the USD.
The presidency of Brazil’s BRICS This year will not advance a common currency for the group of major development economies this year, four government officials said, but its program could open the way to less dependence on the US dollar (USD) in world trade.
This program could attract the anger of American president Donald Trump, who has warned twice in recent months, the BRICS group, founded by Brazil, Russia, India, China, not to challenge the domination of ” powerful American dollar ”.
“There is no chance that BRICS will replace the US dollar in international trade, or elsewhere, and any trying country should say hello to the prices, and goodbye in America!” Trump wrote on social networks last month.
Brazilian officials, who asked anonymity to discuss the plans, said that the idea of a shared currency to replace the dollar, floated by President Luiz Inacio Lula Da Silva and others during the recent heights of Brics, never participated in technical discussions.
Three of the sources have said that Brazil is rather pushing reforms within the BRICS to facilitate international payments in local currencies, opening the door to less dependence on the dollar for world trade, although they declared that it was not the main objective.
“He is not directed against anyone,” said a source, which stressed that the emphasis was placed on the reduction of the friction of world trade.
The agenda includes the study of technologies such as blockchain and the connection of payment systems to reduce transaction costs, according to the standards established by multilateral organizations such as Bank for International Settlements (BIS), said the Three sources.
“No one wants to create problems, but BRICS countries also want to abandon the idea of exploring this possibility,” said another source, adding that no member country intends to eliminate Their reserves in dollars.
Even Lula supported the idea of a new currency for the block, while defending last week last week, the “right of the BRICS to discuss the establishment of trade forms which does not make us fully dependent on the dollar “.
Last week, the Brazil Ministry of Finance and the Central Bank discussed their proposals from the BRIC presidency this year, including cross -border payment initiatives, sources said.
None of the two establishments responded to a request for comments.
Summit in sight
The representatives of the BRICS will meet in South Africa this month on the sidelines of G20 meetings, where Brazil will present its plan for the BRICS summit in July, the sources added.
Founded in 2009 and quickly developed to add South Africa, the Brics group recently included Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia and the United Arab Emirates, this which makes it an increasing diplomatic counterweight with traditional Western powers.
Brazil has acquired importance in discussions on world payments with the rapid rise of its instant payment system, called Pix, which was launched at the end of 2020 and has already exceeded the use of cash, credit and debit cards .
In his first public remarks as a new chief of the Central Bank of Brazil last week, Gabriel Galipolo said that Pix was scheduled so that he could be easily integrated into other payment systems, although governance challenges remain An important obstacle.
Brazil already operates a local currency payment system (SML), managed by its central bank through agreements with Argentina, Uruguay and Paraguay.
The system makes it possible to directly adjust the Brazilian transactions, bypassing the dollar as an intermediary and eliminating the need for exchange contracts.
Although the system reduces intermediation costs, regulations take at least three working days, which has limited adoption.
Argentina was the best trading partner with SML transactions last year, totaling 5.1 billion Reais ($ 878 million) – just a fraction of their $ 27.4 billion in bilateral trade.
“With instant payment technology, these connections could become more secure, faster and cheaper,” said one of the sources.