China-led de-dollarisation gains traction among emerging economies ahead of Brics summit
- Expansion rate of the Brazil, Russia, India, China and South Africa economic bloc seen determining speed at which it stops using US dollar systems
- To help ward off Washington’s alleged currency weaponisation, calls to shift away from the US dollar are growing louder, but a new currency union may be unlikely
The American dollar’s dominance in global trade looks to be challenged by the expansion of an economic bloc involving China, according to research by ING that comes as talk of a currency union has turned heads in the lead-up to next week’s Brics summit.
The association of five major emerging national economies – Brazil, Russia, India, China and South Africa – represents about a quarter of the global economy and accounts for 41.9 per cent of people on Earth. Bloc representatives will meet in South Africa from Tuesday to Thursday.
“We suspect the subject of ‘de-dollarisation’ might gain some traction this summer when senior leaders of the Brics nations meet,” the Dutch bank’s analysts Chris Turner, Dmitry Dolgin and James Wilson wrote in a note on Thursday.
The economic expansion of Brics could determine the speed at which it adopts commercial and financial systems outside of the dollar sphere, posing certain challenges to the dollar’s dominant status as an international currency, they said.