BRICS Summit in October to Discuss De-Dollarization and Multipolarity Plans
According to a report by Andrew Korybko, the upcoming BRICS Summit in Russia's Kazan in October may see a non-binding agreement on de-dollarizing trade between member states. The report, based on an unnamed official cited by the Hindu Business Line, also suggested that the much-discussed "BRICS currency" would be notional, with its value derived from a basket of currencies.
India's Stance on De-Dollarization
The report mentions that New Delhi is currently evaluating its response to the proposals, based on the potential economic and diplomatic benefits, as well as the potential vulnerabilities in relation to China. The BRICS group, which includes Brazil, Russia, India, China, and South Africa, is a voluntary association of countries with a common interest in promoting financial multipolarity.
India, being the world's fifth-largest economy and projected to become the third-largest by the end of the decade, sees potential for the rupee to play a larger role in global trade. However, this could be challenging in a global financial system divided between the American and Chinese superpowers.
India's Concerns about the Yuan's Dominance
India is interested in true financial multipolarity, not financial bipolarity, but it also recognizes that the yuan will accelerate its internationalization through BRICS' de-dollarization efforts. Despite this, India is hesitant to contribute to this trend due to its national interests. The report suggests ways in which the yuan could be avoided in trade with fellow BRICS members.
However, with China being India's top trade partner, there are limits to how far this policy can go. The same applies to BRICS' currency plans, as the yuan is likely to become the dominant currency in any such basket.
India's Approach to De-Dollarization
India's approach to de-dollarization is shared by the rest of the world, except for the American and Chinese superpowers, who would prefer their currency to be the world's dominant one. The challenge for smaller economies is to de-dollarize without replacing dependence on the dollar with dependence on the yuan.
India can internationalize the rupee as much as possible, given the constraints of the evolving global financial system, in order to chip away at both the dollar's dominance and the yuan's rise. The eventual rise of another currency will help advance true financial multipolarity and avert bipolarity.
Bottom Line
The world would objectively benefit from India counteracting financial bipolarity processes. As the fastest-growing major economy that's on pace to become the third-largest one by the end of the decade, India has a significant role to play in this respect, and BRICS can do a lot to support it.
If the Hindu Business Line’s source is correct, then the next summit will reaffirm its members’ voluntary right to de-dollarize their trade with each other and possibly make progress on a BRICS currency basket. These reported plans will further erode the dollar’s dominance, thus weakening US hegemony.
What are your thoughts on this matter? Do you think these plans will be successful in promoting financial multipolarity and reducing the dominance of the dollar? Share this article with your friends and discuss. Also, don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
