Kazan: BRICS, a cooperation mechanism of leading Global South countries, has held its first summit following a historic membership enlargement. Leaders of the grouping, which represents nearly half of the world’s population and over 30 percent of global GDP, were joined by more than 20 other countries in Kazan, Russia. The summit aimed to explore ways of strengthening multilateralism for global development and security, with a key consensus being the push for reforming the international financial system.
According to Namibia Press Agency, despite the collective rise of the Global South making the world increasingly multipolar, the international financial order remains centralized. Trade is predominantly denominated in the U.S. dollar and transactions are mainly conducted through SWIFT. While this structure has facilitated trade for decades and provided financial stability post-WWII, dependence on the dollar exposes global economies to vulnerabilities, particularly underdeveloped economies in the Global South
. These economies often face challenges due to arbitrary monetary policy adjustments by the United States, such as aggressive interest rate hikes by the Federal Reserve, which can cause capital flight and exacerbate debt pressures.
The United States also uses its dominant position to impose sanctions, targeting one-third of countries with financial penalties, which can cripple national economies and affect non-target markets. Former Brazilian President Dilma Rousseff, now president of the New Development Bank (NDB), warns against the use of the dollar as a political tool, undermining its reliability in global finance.
A symbolic gesture by Russian President Vladimir Putin, reportedly waving a BRICS banknote at the Kazan summit, sparked media debate on currency alternatives. BRICS countries are exploring stronger cooperation, with a joint declaration encouraging the use of local currencies and the advancement of a BRICS Cross-Border Payments Initiative. This initiative aims to strengthen banking networks wit
hin BRICS to facilitate trade settlements.
BRICS members have already made progress in using local currencies, such as the RMB in China-Russia trade. The NDB is promoting local currency lending, with significant loans like a 5-billion-rand loan to a South African transport company, highlighting a shift towards local currencies in financing.
The U.S. dollar is expected to remain a key global currency, but BRICS seeks to mitigate the impacts of U.S. monetary and political decisions. BRICS, with the support of more Global South countries, is leading efforts to create a more stable and just international financial system, enhancing the representation of developing nations in global governance.
There is much to be anticipated as BRICS continues to drive changes in the international financial landscape.
