The BRICS bloc of developing economies, formed in 2009, is currently meeting for its 15th summit in Johannesburg, South Africa, with the goal of the meeting being to discuss possible expansion and eventually replacing the U.S. dollar as the premier currency of international reserves and medium of exchange. (Related: END OF THE DOLLAR: South Africa says over 40 countries want to join BRICS.)
Even South African Ambassador to BRICS Anil Sooklal was recently quoted as saying: "The days of a dollar-centric world is over. That's a reality. We have a multipolar global trading system today."
"How else can one possibly achieve the goal of remaking the world's existing geopolitical and economic structure? Why would anyone embark on such an ambitious project? And should the United States and its Western allies be worried?" asked Koffler. "The major move among non-Western countries toward de-dollarization has gained much momentum in the past year and a half. It is a direct result of what many analysts call the 'weaponization' of the U.S. dollar by the U.S. government that levies economic sanctions on countries that Washington doesn't agree with politically."
While BRICS works toward creating a new currency that can challenge the dollar's hegemony, it will have to rely on its New Development Bank for now.
This bank, set up by BRICS nations as an international lender for developing countries, plans to begin lending using the South African, Brazilian and Indian currencies as part of its plan to reduce reliance on the dollar and promote a more multipolar international financial system.
Former Brazilian President Dilma Rousseff currently heads the NDB, and she said the Shanghai-based institution is already considering applications for full membership from about 15 countries and was likely to approve the admission of four or five.
Unlike BRICS itself, NDB's membership criteria are not as intensive and does not require a lot of politicking between the five members. Apart from these five principal BRICS members, four other nations – Bangladesh, Egypt, the United Arab Emirates and Uruguay – are members of the NDB. Rousseff added that it was a priority for the NDB to diversify its geographic representation.
"We expect to lend between $8 billion to $10 billion this year," said Rousseff. "Our aim is to reach about 30 percent of everything we lend … in local currency.
Rousseff noted that BRICS hopes to start issuing debts in the rand for lending in South Africa and do "the same thing in Brazil with the real."
"We're going to try to either do a currency swap or issue debt. And also in rupees," she added. A separate statement by NDB Vice President and COO Vladimir Kazbekov noted that the bank hopes to issue its first bonds in the Indian rupee by October. The bank already lends in the Chinese renminbi.
"We're going to tap [the] Indian market – rupees – maybe by October in India," said Kazbekov. He further noted that the bank also hopes to be able to finance loans with BRICS members using the currencies of other member states.
"Now we start thinking seriously… [about using] one member country's currency to finance projects with that currency in another member," he said. "Let's say, a project in South Africa to be financed in CNY [Chinese yuan], not with USD."
So far, the NDB has already lent around $33 billion for infrastructure and sustainable development projects, mostly in the U.S. dollar, but the rate in which lending is being done in other currencies is rising.
Rousseff noted that using local currencies would be advantageous as it would allow borrowers in member countries to avoid exchange rate risk and variations in U.S. interest rates.
"Local currencies are not alternatives to the dollar," she said. "They're alternatives to a system. So far the system has been unipolar … it's going to be substituted by a more multipolar system."
Learn more about BRICS' efforts toward de-dollarization at DollarDemise.com.
Watch this clip of Democratic presidential candidate Robert F. Kennedy Jr. noting how it is the United States' own fault why Russia felt pushed to embrace China, create BRICS and attempt to dethrone the dollar.