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

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

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Following a summit among the Brics bloc of emerging economies, no progress was evident in the development of an alternative payment system championed by Russia. Photo: EPA-EFE

Published: 6:00pm, 25 Oct 2024

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.”

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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.