De-Dollarization and BRICS

Table of Contents
1 Introduction..............................................................................................................................2

2 Overview of BRICS.................................................................................................................2

3 Unveiling the 15th Summit of BRICS.....................................................................................2

3.1 Expansion process of BRICS............................................................................................3

3.2 De-dollarization of the International Economy via BRICS..............................................3

4 Global Implication of De-dollarization....................................................................................4

4.1 The growing divide between East and West.....................................................................4

4.2 International Financing System in The Global Power Shift.............................................5

4.3 Global Trade and Investment............................................................................................5

4.4 Western Powers' Response................................................................................................5

5 Critical Analysis.......................................................................................................................6

6 Conclusion................................................................................................................................7

7 References................................................................................................................................8
De-Dollarization and BRICS

1 Introduction
The substance of geopolitics is changing because it has many repercussions on diverse domains,
such as the BRICS, which has captured worldwide interest due to its growing role in de-
dollarization. These zephyrs from South Asia will have an influence on both geopolitics and geo-
economics. Furthermore, this newborn organization, BRICS, demonstrates huge regional and
global consequences. Thus, being informed about shifting geopolitics is critical to remaining
relevant.

2 Overview of BRICS
It is an intergovernmental organization dedicated to collaborating with developing countries in
sectors such as the economy, infrastructure, commerce, finance, military, and others. This group
includes five countries: Russia, China, India, South Africa, and Brazil. Relations within this
coherent geopolitical bloc are centered on mutual benefit, equality, and non-interference.
BRICS was originally known as BRIC, which stood for Brazil, Russia, India, and China. But
after 2010, when South Africa was invited by China to join this group; which was without any
hesitation accepted by other member states - the name changed to BRICS.

3 Unveiling the 15th Summit of BRICS

It was a great success for India that it hoisted the 15th summit of BRICS in its country, where
major decisions were taken.
De-Dollarization and BRICS

3.1 Expansion process of BRICS

According to the findings (Plessis, Miridzhanian, & Acharya, 2023), BRICE intends to broaden
its scope, and it has gotten a positive reaction. Six nations were admitted into BRICS
membership at the 15th summit, and they will become formal members by January 2024.
Following this, it will be known as BRICS + 6.

3.2 De-dollarization of the International Economy via BRICS

The BRICS nations have expressed interest in and consensus on reducing their reliance on the
US dollar during this summit. The guest states and the BRICS National agree that the rate at
which the global economy is becoming less dependent on the dollar needs to quicken.
De-Dollarization and BRICS

Some of the agreed measures are as follows:

 BRICS nations are working to discuss bringing a common currency. In the August
Statement, it was said that such a common currency would reduce the vulnerability and
simultaneously increase the payment options for member states. This states that a
pathway which is ways from greenback in international dealing.
 The New Development Bank and Contingent Reserve Arrangement have been launched
by the BRICS to aid in this endeavor. This will serve as the World Bank and IMF's
replacement. It was also decided that loans to the South African Rand and Brazilian Real
would be provided by the New Development Bank.
 Using its currency for trading with the BRICS nations was encouraged. The way China
and Russia have been trading in their own currencies for a while now shows this trend.

4 Global Implication of De-dollarization

4.1 The growing divide between East and West
The gap between the East and the West has widened as a result of the BRICS' increasing
significance. The idea that Eastern states must fend for themselves in order to escape Western
control is becoming more and more prevalent. According to dependency theory, which holds that
the dollar ultimately determines a country's future, the west has made its people dependent on it.
De-Dollarization and BRICS

4.2 International Financing System in the Global Power Shift

As the global financial environment de-dollarizes, the BRICS cooperation signifies a change in
the cross-border financial landscape. The US dominated global trade and finance in the past few
years, and cash transactions were covered by the US dollar. The BRICS coalition's attempt to
lessen their dollar share is a weakness that has undermined their monopoly.
As the world economy becomes less dependent on the dollar, the BRICS partnership is
transforming international banking. The US controlled international banking and trade in recent
years, and cash exchange was covered by the US dollar. Its hegemony has been weakened by the
BRICS collaboration to limit dollar share (Greene, 2023).
Reducing the dollar's weight is one of the BRICS’ strategic goals, and the reason for that is two-
fold:
 The states seek to mitigate the impact of currency fluctuations and stop their economies
from deteriorating due to the present economic policies of the United States.
 Furthermore, encouraging the use of their specific currency for payments within the flow
strengthens regional cooperation and increases economic independence.
4.3 Global Trade and Investment
A de-dollarized global financial environment has an impact on cross-border finance due to
BRICS collaboration. The US dominated global trade and banking, and cash trading was covered
by its currency. Its predominance has been challenged by a BRICS pact to restrict dollar share
(Sullivan, 2023).

Some issues need to be resolved before the full realization of a global economy devoid of USD
transactions. The resolution of regulatory obstacles and currency exchange requires the
collaboration of the BRICS nations as well as other interested parties. As they compete for
financial dominance, the BRICS may come under fire from established financial institutions.

4.4 Western Powers' Response

The US and UK, the two main Western countries, are concerned about the growing de-
dollarization. Critics caution that this short-term stage could undermine Western institutions like
the World Bank and IMF and erode the system. In order to maintain power, Western economies
may purchase US dollars and oppose systemic reforms. Regulations, incentives, or diplomatic
pressure could prevent the dollar from depreciating.
De-Dollarization and BRICS

Because of these evolving geopolitical and economic considerations, the strategies presented
may not work. Power dynamics may change as the BRICS and other powerful nations grow.
Every state may be impacted by the entry of new, powerful nations into the world stage.

5 Critical Analysis
The world political scene, which has long been focused on Asia, is about to hit a tipping point
that will not be influenced by economic data, exchange rates, or the potential collapse of
empires. The significance of this region cannot be discounted, according to the book THE
FUTURE IS ASIAN: Commerce, Conflict, and Culture in the 21st Century (Parag Khanna,
2021). The essence of this change in perspective, rather than being on the center of the balance
of power, is the abrupt recognition of the dynamics of influence and dominance among the
nations of the world.
Geopolitical factors affecting a country's currency are taken into consideration. Dalio, R. (2021)
states in his book "Principle for Dealing with the Changes in the World Order" (p. 189), that the
same phenomenon occurred to all currencies. People are more likely to recognize the value loss
due to the issuing country's control over the currency, which can lead to a lack of awareness of
the risks and negative aspects that other nations pose. The case of brain-born countries like
Brazil, Russia, India, China, and South Africa is used to demonstrate the occurrence of these
phenomena. This is a result of these countries realizing the US dollar's limited position and
seizing the chances that followed.
The major goal of BRICS is to create their own money and reduce the usage of national
currencies, but the dollar may remain the dominating currency for a long time. However, the
BRICS countries' coordinated efforts to develop and expand their economic and financial
institutions show that a dollar supremacy downgrade is far off. The fact that BRICS is already
taking these measures and seems ready to go far in the institutional approach suggests a
fundamental reform of the current monetary framework.
This is not a speculative topic; it is about the dollar's progressive collapse. The affluent country
needs to put in place adaptable policies that respond to changes in the geopolitical and economic
landscape in order to smoothly shift from unipolar to multipolar dominance. If not, the USD's
influence and global advantage might wane.
De-Dollarization and BRICS

Beyond finances, cheap money has an impact. Their impact on strategy, power, and alliances
muddies international politics. As economies expand, aspirations of independence from the West
are raised. A shift in the power balance indicated this. Future international politics will be shaped
by how developed countries like the US respond to change. But Western countries need to adjust
to a new global environment and expand their influence via cooperation, financial rewards, and
partnerships.

World history is fully portrayed by the ebbs and flows of money, the power of economics, and
the ups and downs of global diplomacy. The dollar declines and the BRICS struggle while Asia
grows, illustrating the reconfiguration of the world economy. Extra precautions are needed for
evolutionary safety. Change should be anticipated and addressed by policies. Government
collaboration and stability are necessary for the global economy.

6 Conclusion
Beyond finances, cheap money has an impact. International politics are made more complex by
their effects on power, alliances, and strategies. Growth in the economy gives promise for
Western freedom. Power balance changes revealed this. Global politics will be shaped by how
affluent countries like the US perceive changes. But Western countries have to adjust to a new
global reality and use alliances, cooperation, and financial inducements to increase their
influence. World history is embodied in money, economics, and international diplomacy. The
world is changing as Asia rises and the dollar declines and the BRICS struggle. Extra care must
be taken to ensure evolutionary safety. Change should be anticipated and addressed by policies.
Government collaboration and stability are necessary in today's linked world.
De-Dollarization and BRICS

7 References
Dalio, R. (2021). Principles for dealing with the changing world order: Why nations succeed or
fail. Simon and Schuster.

THE FUTURE IS ASIAN: Commerce, conflict, and Culture in the 21st Century - Parag Khanna.
(2021, July 30). Parag Khanna. https://www.paragkhanna.com/book/the-future-is-asian-
commerce-conflict-and-culture-in-the-21st-century/
Plessis, C. du, Miridzhanian, A., & Acharya, B. (2023, August 25). BRICS welcomes new
members in push to reshuffle world order. Reuters. https://www.reuters.com/world/brics-
poised-invite-new-members-join-bloc-sources-2023-08-24/
Sullivan, J. (2023, November 8). BRICS currency could end dollar dominance. Foreign Policy.
https://foreignpolicy.com/2023/04/24/brics-currency-end-dollar-dominance-united-states-
russia-china/
Greene, R. . . (2023, December 5). The difficult realities of the BRICS’ dedollarization efforts—
and the Renminbi’s role. Carnegie Endowment for International Peace.
https://carnegieendowment.org/2023/12/05/difficult-realities-of-brics-dedollarization-
efforts-and-renminbi-s-role-pub-91173