BRICS Oil Trade Underlines Need for Alternative Cryptocurrency

• Debate Over BRICS Currency Increases Amid Local Currency Promotion
• BRICS Oil Trade Highlights the Need for Alternative Currency
• Russian Trade Relations With India and China
• Settlement Challenges for Russia
• The Dollar's Role and the Need for a BRICS Alternative

Debate Over BRICS Currency Increases Amid Local Currency Promotion

In the preceding year, the potential of a BRICS alternate currency has been a topic of heated debate. Several analysts highlight the unlikely aspects of the concept, while others underscore its promising potential. This comes amidst the BRICS bloc's intensified efforts towards promoting the use of local currency, reinforcing the necessity for an alternate currency. The BRICS consortium, collectively, has advocated for increased de-dollarization in bilateral trade, which has led to a certain degree of dysfunction due to the respective local currency use of different countries. This has particularly evidenced in oil trade transactions between Russia and India, reinforcing the necessity for an independent BRICS currency.

BRICS Oil Trade Highlights the Need for Alternative Currency

BRICS' significant growth in the past year has been a focal point in international geopolitics. The economic alliance has implemented an expansion plan incorporating six new countries at its 2023 annual summit. Additionally, they have incorporated extensive de-dollarization initiatives into their bilateral trade dealings. However, this reality, along with the push towards local currency usage, has posed certain challenges.

Notably, the BRICS oil trade has emerged as a key factor emphasizing the importance of an alternate currency. Specifically, a comprehensive analysis by Business Insider into the trade transactions between Russia and India revealed a significant problem when abandoning the dollar for bilateral trade. The primary issue lies in the difficulties associated with conducting cross-border transactions using a single nation's currency.

Russian Trade Relations With India and China

The report indicates that Russia has strengthened trade relations with India and China following the sanctions imposed after the Ukraine invasion. However, the report also highlights how trading with India has created difficulties for Russia, due to India insisting on settlements in Indian Rupees.

Settlement Challenges for Russia

The non-convertible nature of the Indian Rupee poses significant challenges for Russia. As a result, billions of rupees are now held in various Indian banks. While India encourages these funds to be spent domestically, Russia has faced obstacles in identifying suitable expenditure within the country.

The Dollar's Role and the Need for a BRICS Alternative

This situation underlines the importance of maintaining the dollar's position in international trade relations. However, it concurrently indicates the need for the BRICS bloc to develop its own alternate trade currency. The conversion of these funds within BRICS nations offers potential for cross-border transactions. This allows for de-dollarization to align with the bloc's internal promotion, preventing the problems arising from the oil trade between Russia and India.

Edited by Jonathan Stoker