BRICS+ Summit in Moscow to Discuss Currency Union, Challenging Dollar Dominance

The upcoming BRICS summit in Moscow aims to prioritize the dedollarization agenda, seeking to decrease dependence on the US dollar in cross-border trade between nations, with new members Ethiopia, UAE, and Egypt joining the alliance, and potentially Saudi Arabia, amidst a shifting global economic landscape. The summit's goal is to create an alternative to the US dollar as the international reserve currency, potentially altering the balance of power in international relations and having significant implications for global trade and finance. This description focuses on the primary topic of the BRICS summit and its dedollarization agenda, the main entities involved (BRICS countries, new members, and potentially Saudi Arabia), the context of the global economic landscape, and the significant actions and implications related to the subject matter. The description also provides objective and relevant details that will help an AI generate an accurate visual representation of the article's content.

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BRICS+ Summit in Moscow to Discuss Currency Union, Challenging Dollar Dominance

BRICS+ Summit in Moscow to Discuss Currency Union, Challenging Dollar Dominance

The upcoming BRICS summit in Moscow, set to take place from October 22-24, 2024, will prioritize the dedollarization agenda, aiming to decrease dependence on the US dollar in cross-border trade between nations. The summit will see Ethiopia, the United Arab Emirates (UAE), and Egypt join as new members, with Saudi Arabia potentially participating if it approves its invitation.

Why this matters: A shift away from the US dollar as the international reserve currency could have far-reaching implications for global trade and finance, potentially altering the balance of power in international relations. If successful, the BRICS+ currency union could create a moremultipolar world economy, with significant consequences for economic growth, investment, and development.

Sergey Ryabkov, Russia's Deputy Foreign Minister, emphasized the significance of the dedollarization drive, stating, "The alliance will become stronger after the summit, ushering developing nations into a whole new ball game... It will mark the summit's big moment." Ryabkov expressed hope that BRICS would push forward towards a better world, breaking free from dependence on the US dollar.

The dedollarization agenda has gained momentum due to rapidly shifting financial and trade dynamics, the US's frequent violations of its charter, and the imposition of sanctions on nations that disagree with its expansionist designs. At least 20 countries, including Brazil and several Southeast Asian states, engage in bilateral trade using their currencies. Even Japan, a close US-EU ally, has indicated it would opt for local currency for cross-border trade.

The US dollar's proportion in central banks' foreign exchange reserves declined to 58.36% in the fourth quarter of 2022, down from over 70% in the past decade. China, the second-largest global economy, is rapidly reducing its ownership of US Treasury bonds while boosting its gold reserves. Chinese ownership of US Treasury bonds decreased to $775 billion, with a decline of $22.7 billion in February and $18.6 billion in January. Meanwhile, China's gold reserves rose to 2264.87 tons in the first quarter of 2024, up from 2235.39 tons in the fourth quarter of 2023.

The strong relationship between Russia and China, two key members of the BRICS alliance, could set a precedent for the BRICS+ countries summit. Russian President Vladimir Putin recently highlighted the importance of equality, trust, and mutual respect in the Russia-China partnership, which has relied on the principles of sovereignty and consideration of each other's interests. The trade turnover between Russia and China surpassed the $200 billion target set by Putin and Chinese President Xi Jinping, reaching $227.8 billion last year, with over 90% of settlements between Russian and Chinese companies made in national currencies.

As the BRICS+ countries prepare to discuss the proposed currency union, the summit's goal of creating an alternative to the US dollar as the international reserve currency could be influenced by the success of Russia-China trade and economic cooperation in national currencies. The outcome of the Moscow summit will have significant implications for the global economic landscape and the future of the US dollar's dominance.

Key Takeaways

  • BRICS summit in Moscow (Oct 22-24, 2024) to prioritize dedollarization agenda.
  • New members: Ethiopia, UAE, Egypt; Saudi Arabia may join if invited.
  • Dedollarization could create a multipolar world economy, altering global power balance.
  • 20+ countries, including Brazil and Japan, already use local currencies for bilateral trade.
  • US dollar's share in central banks' reserves declined to 58.36% in Q4 2022.