Latest news with #BricsSummit
The Citizen
2 days ago
- Business
- The Citizen
Brics bloc slows down on de-dollarisation
Member countries made no new decisions on launching its own currency at the recent summit in Brazil. The technical, political and logistical hurdles of launching its own medium of exchange remain huge. Picture: Mika Otsuki / The Yomiuri Shimbun via AFP) Member countries of the Brics trading bloc seem to have backed down from their rather lofty ideal of establishing their own currency to counter the dominance of the US dollar and the euro, choosing to slow down the process by focusing on growing cross-border trade in national currencies – for now. Commentators noted that current economic and geopolitical uncertainties may have contributed to the new cautious approach while US President Donald Trump's trade war certainly led to it by pitting the US against everyone else. Although the creation of a Brics currency featured prominently at the 2024 Brics Summit in Kazan, Russia, it has become clear that ambitions for an immediate launch have cooled. Russian President Vladimir Putin, who once led the charge for de-dollarisation, appeared on stage at the summit holding what seemed to be a prototype Brics banknote, dubbed the Unit. Now even Putin has softened his tone, stating that the bloc's goal was not to break away from the US-dominated SWIFT (Society for Worldwide Interbank Financial Telecommunications) financial system entirely but rather to reduce the dollar's 'weaponisation' and promote the use of local currencies for trade between the Brics members. ALSO READ: 'Trump is talking from the past': US president 'might regret' warning to Brics over dollar Since discussions around a new global reserve currency began in earnest during the 14th Brics Summit in 2022, progress has largely been rhetorical. Putin then said the Brics countries were ready to issue a new reserve currency backed by a basket of Brics currencies. Brazil's President Luiz Inácio Lula da Silva echoed this vision in 2023, but hopes of a major announcement at that year's summit failed to materialise. The latest summit, held in July 2025 in Rio de Janeiro, took a more measured tone. While the idea of launching a Brics currency – potentially backed by gold – remains on the table, there is no timeline for its implementation. Brazil, which holds the rotating presidency of the group this year, confirmed that no significant decisions on a new currency are imminent. Still, efforts to reduce reliance on the greenback continue. ALSO READ: 'They can find another sucker!': Trump warns Brics countries against replacing dollar The final declaration of the summit runs to 31 pages and outlines extensive plans to deepen cooperation across a range of issues, from global institutional reform and AI development to climate change and logistics infrastructure. The document reaffirms the bloc's commitment to using national currencies in cross-border trade and promoting financial systems independent of the US dollar, including the further development of the Brics Pay platform and consolidation of the Brics New Development Bank (NDB). The goal is clear: shift away from dollar dominance without destabilising global markets or member states' economies. ALSO READ: Analysts say Trump's bid to weaken Brics will fail as US influence declines Trump The return of Donald Trump to the White House on 20 January 2025 has added a new layer of complexity. Markets reacted immediately. The dollar strengthened and currencies such as the Chinese yuan, Russian ruble, Brazilian real, Indian rupee and SA rand depreciated sharply in the days following Trump's election and subsequant inauguration. While these initial losses were later reversed, the shock underscored the power the US still holds in global finance – and why Brics nations may be hesitant about provoking unnecessary volatility by launching a competing currency. Trump's renewed 'America First' rhetoric and ongoing trade disputes with China, Russia and other countries have reinforced the sense among Brics nations that economic resilience requires diversification. But even with this motivation, the technical, political and logistical hurdles of launching a shared Brics currency remain huge. The Atlantic Council, a grouping of US organisations that support the Atlantic Alliance, points out that the dollar continues to dominate the global financial system, as it is used in about 88% of currency trades and comprises 59% of all central bank reserves. While the share of world trade conducted in dollars has gradually declined, the dollar remains entrenched as the world's primary reserve and settlement currency. ALSO READ: Trump victory: Trouble for the rand and Brics allies, joy for crypto Patience In a report by the International Institute for Middle East and Balkan Studies (IFIMES), Advisory Board member and retired Romanian army general Corneliu Pivariu, offered a frank analysis of the summit's outcomes. He characterised the July 2025 Brics meeting as 'a turning point', and said there is potential to accelerate the process of de-dollarisation and the consolidation of a multipolar economic order. Yet he acknowledged that the movement remains cautious. 'The summit reflects the consolidation of Brics as an alternative, but cautious pole, without radical steps. The event marks a shift from ideological rhetoric to practical measures for building economic, financial, and technological autonomy,' said Pivariu. He noted that the summit took place against a backdrop of stagnating Western economic growth, the prolonged Russia-Ukraine war, rising tensions in the Middle East, and accelerating industrial development across Asia. ALSO READ: It's official: Brics welcomes new members to partnership Other 'more significant' moves While the Brics bloc reaffirmed its commitment to reforming global institutions such as the United Nations, International Monetary Fund, and the World Bank, Pivariu says the bloc's more significant moves involve promoting independent payment systems, developing internal supply chains, and pursuing technological cooperation aimed at achieving medium-term autonomy. 'The 2025 Brics meeting will consolidate the trend of diversifying global economic and financial relations, offering member states and partners an alternative to dollar hegemony. 'Through energy and resource agreements, Brics will reduce its members' exposure to sanctions imposed by the USA and EU,' he said. He warned, however, that the West is taking notice. 'The US and the EU have expressed concerns regarding the accelerated de-dollarisation process, fearing the loss of global financial influence and the shift of trade flows towards Brics platforms,' Pivariu said in the report. He added that Europe may need to adjust its energy and industrial strategies to mitigate the risk of being edged out of key markets, especially in the Southern Hemisphere. ALSO READ: Brics bank approves over R20 billion in loans for South African infrastructure projects Idea to infrastructure It is becoming clear that Brics members are moving away from sensational headlines and emotional announcements towards the less glamorous and more practical tasks of building infrastructure to promote systems for financial and physical trade. Pivariu said the summit's emphasis on cross-border systems, local currency settlement, and digital payment integration shows that the member countries understand their limitations, but are 'willing to play the long game'. 'While a gold-backed Brics currency might grab attention, the immediate reality is that increasing the use of national currencies in trade, establishing sovereign payment rails, and strengthening institutions like the NDB offer far more practical benefits for now. 'The Brics strategy seems to be about laying the groundwork for autonomy rather than attempting to topple the dollar overnight,' Pivariu said. 'The summit confirmed that technological and industrial partnerships are becoming a strategic pillar of the bloc. 'In the medium term, Brics aims to create an integrated internal market and transform itself into a major global industrial-technological actor.' This ambition, if realised, would represent the most meaningful step yet toward a multi-polar world, with or without a shared Brics banknote. This article was republished from Moneyweb. Read the original here.
Hindustan Times
16-07-2025
- Business
- Hindustan Times
Whatever happened to Brics common currency
Yet another Brics Summit has ended as a non-event. The joint declaration at Rio de Janeiro, despite its grandstanding about multilateralism and a rules-based international order, is more notable for its political posturing: it calls for Israel's withdrawal from Gaza and condemnation of Ukrainian attacks on Russian infrastructure. The fact that geopolitics now occupies more mind space than economics in Brics is evident from the near silence in the declaration on its once-flagship initiative — a Brics common currency. The focus has quietly shifted to a more modest, though still ambitious, goal of promoting trade and settlement in local currencies. Meanwhile, US President Donald Trump has threatened 10% additional tariffs on Brics countries for what he labels 'anti-American' policies. (And, on Monday, when the Shanghai Cooperation Organisation was meeting in Beijing, he threatened 100% tariffs on Russia and secondary sanctions on countries buying oil from Russia, among them India.) His frustration is not unfounded. The Brics effort to reduce reliance on the dollar directly challenges American economic dominance. The dollar's centrality in global finance gives the US a structural advantage. As the world's primary reserve currency, the dollar allows America to borrow more cheaply in global markets. The world's demand for dollar assets effectively provides the US with an endless supply of low-cost credit. For example, if you carry $100 in your pocket, you are in effect giving America an interest-free loan of $100. That is the essence of what former French finance minister (and later president) Valéry Giscard d'Estaing famously called America's 'exorbitant privilege'. That privilege goes beyond economics. It gives the US the unique power to weaponise the dollar, using financial systems like Swift and dollar-clearing banks to impose sanctions and exert political pressure. Brics's move toward de-dollarisation is, in part, a pushback against this power. Still, for all the motivation, a Brics common currency remains a difficult project. Unlike the eurozone whose members are geographically contiguous and share broadly similar political and economic institutions, Brics countries are scattered across continents, with stark differences in governance, development levels, GDP sizes, and strategic interests. Even assuming political will, formidable technical and institutional hurdles remain. A common currency requires a common interest rate. But how do you calibrate monetary policy that works at the same time for China and South Africa, or Brazil and India, given their vastly different growth and inflation dynamics? More critically, are these countries ready to cede monetary sovereignty and expose themselves to the risk that economic instability anywhere in the bloc could mean economic instability everywhere? An even more complex issue is the China factor. With China contributing roughly 70% of the bloc's combined GDP, any common currency arrangement will inevitably be dominated by Beijing. In trying to escape the hegemony of the dollar, would Brics willingly embrace the hegemony of China, an authoritarian state with questionable transparency, weak institutional checks, and limited commitment to the rule of law? While the common currency vision stalls, the motivation to break free from dollar dominance remains strong, and is growing. The biggest driver is trade. A large proportion of intra-Brics trade is still settled in dollars, adding avoidable transaction costs. Eliminating these costs by using local currencies could boost intra-Brics trade. There are also deeper concerns. Brics countries see dollar dependence as a source of systemic risk to their financial stability. The Global Financial Crisis (GFC) of 2008 was triggered by reckless risk-taking in the US housing and banking sector. Had this happened in an emerging economy, its currency would have collapsed. But the dollar, paradoxically, gained value during the crisis. Global capital, in search of safety, fled emerging markets and rushed into US assets, a phenomenon economists call the 'safe haven effect'. Ironically, it was emerging markets that paid the price for America's excesses. The GFC wasn't a one-off. The taper tantrum of 2013, the Covid-19 shock of 2020, and even recent US interest rate hikes have repeatedly exposed emerging economies to capital flight, currency volatility, and inflation — all collateral damage of an American centric global finance. Against this backdrop, Brics's pivot towards trade in local currencies seems pragmatic. While less radical than a common currency, it is a tangible step towards financial autonomy. For instance, if India and Bangladesh settle their bilateral trade in rupees and takas, both benefit by cutting out the dollar intermediation costs. However, local currency trade works best when bilateral trade is roughly balanced. But if the trade is lopsided, the arrangement falters. That's what happened with India-Russia trade. When Russia agreed to accept rupee payments for its oil exports, it quickly began accumulating rupee balances far beyond what it could spend on Indian goods. With no outlet for those rupees, Russia backed away from the deal. Can Brics still push ahead with local currency trade, especially under threat of punitive US tariffs? It's worth remembering that the dollar's status as a global reserve currency is not backed by any formal treaty. There's no international law obliging nations to use it. So under what legal basis can Trump, or indeed any American president, mandate Brics countries to stay within the dollar-based system? Yet, as we have seen over the last few months of Trump 2.0, US tariffs, no matter how whimsical, are hard to defy. This puts India in a delicate spot. As the US prepares to assume the presidency of the G20 next year, India will need to carefully navigate between supporting the Global South's push for a more multipolar financial system and maintaining stable relations with America, its most important strategic partner. Duvvuri Subbarao is a former governor of the Reserve Bank of India. The views expressed are personal.
South China Morning Post
12-07-2025
- Business
- South China Morning Post
As Trump targets Brics, Indonesia's autonomy hangs in the balance
This month's Brics summit in Rio de Janeiro, Brazil, marked a pivotal moment that reflects shifting global power dynamics. By consolidating into a stronger multipolar bloc, emerging economies are effectively challenging the long-standing dominance of a Western-led order. Advertisement Brics released a joint statement, criticising unilateral tariffs and non-tariff measures that disrupt global trade. The statement called for reforms of institutions such as the International Monetary Fund and the World Bank. Brics leaders also condemned recent attacks on Iran, albeit without naming the US and Israel. Nonetheless, the US has responded with confrontational threats, including the potential use of tariffs. On his Truth Social account, US President Donald Trump declared that, 'Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff ', emphasising that there would be no exceptions. Trump not only threatened a 10 per cent tariff on Brics members but also sent a letter to Indonesian President Prabowo Subianto threatening to impose a 32 per cent tariff on all Indonesian exports starting on August 1. Trump justified the threat based on the US' trade imbalance with Indonesia, the latest full member of Brics In the letter, Trump stated the tariffs could be reconsidered if Indonesia agreed to establish manufacturing operations in the US. Advertisement This not only intensifies tensions between Washington and Brics, but also puts countries like Indonesia under significant pressure. Jakarta now faces the challenge of balancing geopolitical independence with the short-term interests of trade and investment.
TimesLIVE
12-07-2025
- Politics
- TimesLIVE
Gift of the Givers strongly backs 'honourable' Mkhwanazi
As tensions build up ahead of President Cyril Ramaphosa's address on Sunday evening, organisations and individuals are speaking out on the conflict involving KwaZulu-Natal police commissioner Lt-Gen Nhlanhla Mkhwanazi and police minister Senzo Mchunu. Last Sunday Mkhwanazi made the shocking claim that the disbandment of the political killings task team was orchestrated to shield politically connected members of a criminal syndicate from prosecution, with the assistance of Mchunu. Now, as the country waits for Ramaphosa's promised response to the claims, voices are emerging, opinions are being aired and people are taking sides. One of these is the humanitarian aid organisation Gift of the Givers, which has come out firmly in Mkhwanazi's corner. 'SAPS is so often vilified, insulted, demeaned, maligned, accused of corruption, inaction and inefficiency. Yes, there are those within the SAPS, as in every institution, that have failed to perform, but to generalise and paint an entire institution with the same negativity is disingenuous, demoralising, unjust and unfair to those men and women in blue who put their lives on the line, who strive to serve with distinction, in spite of being under-resourced, unprotected, outgunned and unmatched by sophisticated criminal networks with the most advanced technology at their behest,' Gift of the Givers stated on its social media. 'Leadership, bravery, courage, intelligence, pragmatism, fairness and justice appears in the form of Lt-Gen Nhlanhla Mkhwanazi, who challenges superiors, management, politicians, lawmakers and the system itself, in the interest of the citizens of our beloved country.' 'Gift of the Givers stands behind this honourable man totally,' said the disaster relief group's founder Dr Imtiaz Sooliman. 'He represents everything that is right in the SAPS confronting organised crime in the form of CIT heists, drug dealing, corrupt politicians and civil servants, tenderpreneurs, construction mafia, taxi gangsters, hijackers and those defeating the ends of justice within all facets of the criminal justice system,' said Sooliman. 'Here is a servant of the law who inspires his own teams to be fearless, courageous and decisive in confronting everything that is rotten to the core in our society. We call on President Cyril Ramaphosa to personally give this servant of the state a hearing on the allegations and on how to improve the crime-fighting capability of the state and fully support him as the president has done so previously by calling for the establishment of a task team to deal with political killings so rife in KZN.' Ramaphosa was attending the Brics Summit in Rio de Janeiro, Brazil, last Sunday when Mkhwanazi made his astounding accusations. Mchunu has hit back, describing the claims as 'baseless' and 'wild allegations'. However, he later admitted to knowing one of the suspects named by Mkhwanazi, businessman Brown Mgotsi — dismissing their links as 'just a comrade'. Ramaphosa's office says he has 'been seized with this matter ... and will, following various consultations, take the nation into his confidence' at 7pm on Sunday'.
Time of India
11-07-2025
- Business
- Time of India
DIF flags security risk in Pakistan's bid to join Brics-backed AI bloc
Bengaluru: The Digital India Foundation (DIF), a founding member of the AI Alliance Network (AIANET), has opposed the proposed inclusion of Pakistan's AI Technology Centre (AITeC) in the alliance, warning that it could compromise the group's credibility, security and core values. Formed following the Brics Summit in late 2024, AIANET was envisioned as a multilateral coalition of AI research institutions committed to ethical, transparent and peaceful development of artificial intelligence. The alliance brings together member institutions from Brics nations and other aligned democracies to foster collaboration in civilian AI research, safeguard against dual-use risks, and set global benchmarks for responsible innovation. In a letter to AIANET leadership dated July 11, 2025, DIF argued that Pakistan's AI ecosystem lacks institutional accountability, suffers from weak legal safeguards, and is shaped by military-led programs with limited civilian oversight. It warned that AITeC's entry would pose a direct threat to the network's integrity. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like An engineer reveals: One simple trick to get internet without a subscription Techno Mag Learn More Undo 'The membership application of AITeC should be seen as Pakistan's way of gaining access to our R&D and technology with the aim of weaponising AI,' said Dr. Arvind Gupta, co-founder and head of DIF. 'We need to ensure that this does not happen.' DIF flagged several AITeC labs, including those focused on autonomous systems, computer vision, and edge computing, for their dual-use potential and susceptibility to being repurposed for cyber operations, cross-border targeting, or terrorism-linked surveillance. It also cited the 2025 US Country Reports on Terrorism, which highlight the risk of AI tools being used by Pakistan-based groups such as Lashkar-e-Taiba and Jaish-e-Mohammed. Pakistan remains on the Financial Action Task Force (FATF) grey list due to ongoing failures in curbing terror financing and money laundering. DIF warned that in such an environment, AI labs could be exploited to automate illicit finance channels, including crypto-driven fundraising for extremist networks. The think tank also noted that Pakistan lacks enforceable data protection laws and independent oversight mechanisms, both of which are prerequisites for AIANET membership. It pointed out that the country's flagship AI agency — CENTAI, under the Pakistan Air Force — prioritises defence applications, which contradicts AIANET's civilian-first charter. 'Pakistan's integration into this multilateral AI framework would fundamentally undermine the alliance's commitment to public-good innovation,' DIF stated, urging all members to reject the application in full. The foundation called on AIANET to protect its democratic foundations, global cooperation principles, and long-term goal of building AI systems aligned with ethical and lawful use.
