BRICS Bank Shifts to Local Currency Funding, Abandons US Dollar

• BRICS New Development Bank Aims for Local Currency Funding
• A Transition Towards Dedollarization
• BRICS Bank to Majorly Fund in Local Currencies
• Dedollarization is a Process
• Opportunities for Currency Swaps

BRICS New Development Bank Aims for Local Currency Funding

In a significant progression for the coalition, BRICS New Development Bank is planning to finance projects using local currencies. This development is a step towards dedollarization, reducing reliance on the US Dollar for unilateral transactions. This could have a substantial impact on the group's broader dedollarization ambitions.

A Transition Towards Dedollarization

In a conversation with CGTN Africa, New Development Bank Vice President Vladimir Kazbekov discussed this transition. He described dedollarization as a process and acknowledged that it can't happen instantly. He further elaborated how the bank is contributing to the continuity of this process through its financing practices.

BRICS Bank to Majorly Fund in Local Currencies

The growth of the BRICS alliance is a significant geopolitical advancement. Notably, the alliance has expanded its membership, moving from a five-member association to ten represented nations. As a result, its focus on dedollarization has broadened with the incorporation of more members.

With an increasing number of participants, the strategy to reduce worldwide dependency on the dollar has made a big leap in another crucial area. The BRICS New Development Bank has announced its intent to finance projects in local currencies, reducing its reliance on the US Dollar.

Dedollarization is a Process

Vladimir Kazbekov, the vice president and chief operating officer of the bank, elaborated on the new financing strategy during an interview with CGTN Africa. He referred to dedollarization as a process and stated that the speed of this process depends on various conditions, countries, markets, etc.

He also pointed out that currencies like China's yuan are much less expensive than the dollar, which presents an opportunity for the bank to seize. More so, he identified the potential of using the yuan to finance projects outside of China. Such initiatives could have enduring implications for promoting the alliance's local currencies.

Opportunities for Currency Swaps

Contrarily, Kazbekov talked about the potential for currency swaps within the development bank. The BRICS alliance has made numerous currency swap agreements over the past year, among different countries within the alliance. These types of deals could have another feasible pathway through the New Development Bank.

Edited by Jonathan Stoker