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Amanda Lee

While there are growing concerns among the Brics bloc of emerging economies over the scope of financial sanctions from the United States, few countries in the grouping seem ready to ditch the US dollar despite Russian President Vladimir Putin’s recent efforts to encourage an alternative system of payment among members.
Following an expanded summit for the bloc hosted in his country – and a communique indicating little progress had been made on such a system, analysts said – Putin appeared to concede the matter, saying the bloc’s constituent nations “have not and are not” pursuing the idea.
His stance by summit’s end on Thursday was a marked contrast with his opening speech for the gathering the day before, where he issued a call for an international payments system that could prevent the US from using its dollar as a political weapon.
One reason an alternative system has not been adopted is that few countries are willing to give up the US dollar entirely, said James Chin, a professor of Asian Studies at the University of Tasmania in Australia.
“It’s very difficult to bypass the US dollar,” Chin said. “A bilateral currency agreement seems to be the easiest way. In some ways, it is a bit clumsy, but it can be done if the amount is big enough.”


Chin was referencing efforts by the People’s Bank of China, which has agreed to 40 bilateral swap lines with other central banks enabling them to exchange their local currencies for the yuan.
Before the summit in Kazan, Russia sketched an outline for a payment platform in national Brics currencies that would include a new messaging system and a network of national commercial banks linked through the Brics central banks.
The incentive for alternatives to the US dollar is stronger for Russia than most other Brics members; it is grappling with unprecedented US-led sanctions levied after its invasion of Ukraine in February 2022.
Delays in trade payments have become a major headache for Russian companies and banks, even with major partners like China or Turkey, as banks everywhere come under pressure from Western regulators to scrutinise transactions.
As geopolitical frictions continue to mount, financial institutions in China and Russia are looking to minimise their exposure to the US-led financial order – particularly the Society for Worldwide Interbank Financial Telecommunication, a messaging system that facilitates rapid cross-border payments.
A higher reliance on barter trades and Russia’s home-grown Mir payment system, set up by the Bank of Russia as an alternative to Visa and Mastercard, are two of several possibilities that have been discussed between the two neighbours.
Using local currencies for cross-border payments is important for … maintaining monetary sovereignty
Zhou Xiaochuan, People’s Bank of China
Former PBOC governor Zhou Xiaochuan said the focus for China, Southeast Asia and the Gulf states should be to “strengthen the cross-border use of local currencies”, while still acknowledging the importance of the US dollar assets and the depth of US capital markets.
Zhou cited the example of mBridge, China’s cross-border digital currency initiative, as a means of filling vacancies in the international payment system.
“Using local currencies for cross-border payments is very important for implementing independent monetary policies and maintaining monetary sovereignty,” said Zhou at a forum in Beijing on Wednesday, according to a Thursday report by the Beijing News.
“Whether the US dollar can continue to be used as a reserve currency and international trade settlement currency depends largely on the US government itself. If the US uses the dollar as a weapon, it will reduce the willingness of other countries to use the dollar.”


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Though Vladimir Putin has called for the group of emerging economies to develop an alternative payment system, enthusiasm appears limited


Though Vladimir Putin has called for the group of emerging economies to develop an alternative payment system, enthusiasm appears limited.


China, Brics bloc not ready to reject US dollar despite Russian entreaties

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Though Vladimir Putin has called for the group of emerging economies to develop an alternative payment system, enthusiasm appears limited

Though Vladimir Putin has called for the group of emerging economies to develop an alternative payment system, enthusiasm appears limited