Brazil's BRICS presidency this year will not promote a common currency for the major developing economies within the group. However, its agenda could facilitate reduced reliance on the U.S. dollar in global trade. This direction might provoke the disapproval of U.S. President Donald Trump, who has cautioned the BRICS group against challenging the supremacy of the U.S. Dollar.
The Brazilian officials, speaking anonymously about the plans, mentioned that the proposed common currency idea, suggested at recent BRICS summits, has not progressed to detailed discussions. Instead, Brazil is advocating for reforms within BRICS to facilitate international payments in local currencies, with the aim of decreasing dependency on the dollar in global trade, though not as the primary goal.
The focus is more on streamlining global trade by exploring technologies like blockchain and connecting payment systems to reduce transaction costs and aligning with standards from institutions such as the Bank for International Settlements (BIS). The objective is not to cause disruption but rather to enhance trade efficiency.
The sources clarified that no member country is planning to eliminate their dollar reserves, and even though the concept of a new currency within the BRICS bloc has been put on hold, discussions around creating alternative trade mechanisms have not been discarded.
Brazil's Finance Ministry and central bank have presented their BRICS presidency proposals for this year, involving cross-border payment schemes. The BRICS representatives will convene in South Africa this month during the G20 meetings to discuss Brazil's plan for the BRICS summit scheduled for July.
The BRICS group, established in 2009 and expanded with the inclusion of South Africa, has seen an expansion to encompass other countries making it a rising diplomatic force against Western powers.
Brazil's innovative instant payment system, Pix, launched in 2020, is gaining attention in global payment conversations. It has outpaced traditional payment methods and could potentially revolutionize international payments, though governance challenges still need addressing.
Brazil handles local currency transactions with neighboring countries through its Local Currency Payment System (SML) managed by the central bank. The system allows transactions to be settled in Brazilian reais, bypassing the need for the U.S. dollar as an intermediary, which could lead to more secure, efficient, and cost-effective cross-border transactions, especially with the advancement of instant payment technology.