BRICS Bank Progresses in Funding: Swaps US Dollar for Cryptocurrency

• BRICS Continues Effort Toward De-dollarization
• Roles of the New Development Bank
• Implications of Global Events on BRICS Bank
• NDB's Expansion and Rebound
• Future of De-dollarization

BRICS Continues Effort Toward De-dollarization

In 2024, the ambition of BRICS, an association made up of five major emerging national economies: Brazil, Russia, India, China, and South Africa, to move away from the US dollar continues. Predictions show that new nations are expected to join the bloc, providing additional support for this worldwide initiative. Though a significant amount of work remains to fully achieve this goal, the New Development Bank (NDB), also known as the BRICS Bank, has made considerable progress.

Roles of the New Development Bank

Under the leadership of former Brazilian president Dilma Roussef, the Shanghai-based NDB provides loans for infrastructure projects on behalf of BRICS. The bank primarily serves emerging economies, offering critical financial support. Consequently, this assistance benefits the local countries that support BRICS, instead of the West.

Implications of Global Events on BRICS Bank

However, the Russia-Ukraine crisis posed significant challenges to the BRICS Bank. As a result of Russia's involvement in the project, the bank was unable to comply with Western sanctions. This situation has given major advantages to the Asian Infrastructure Investment Bank, another prominent Beijing-backed financial institution. Additionally, the BRICS Bank has been struggling due to uncompetitive rates.

NDB's Expansion and Rebound

Despite these setbacks, the expansion of BRICS is anticipated to aid the recovery of the NDB, particularly with the prospective addition of Saudi Arabia and the United Arab Emirates. These two nations could provide a significant influx of funding for the BRICS Bank, ideally supporting infrastructure projects. Moreover, the NDB has found success in offering long-term loans in the local currencies of developing nations rather than in US dollars. As these transactions are not subject to US sanctions, it further drives BRICS' long-term goal of de-dollarization.

Future of De-dollarization

While BRICS continues to work toward their goal of de-dollarization, they still have a considerable journey ahead. However, the anticipated increase in funding for the NDB will likely reduce the control that the West and the US dollar have over the association.

Edited by Jonathan Stoker