Editor’s note: This story is part of Mariblock’s “State of Fiat” coverage. Digital assets such as bitcoin are seen as competitors to central bank money. Therefore, we consider informing our audience of the state of their local currencies worthwhile.
Egypt has applied to join the alliance of Brazil, Russia, India, China and South Africa (BRICS), and will conduct international trade with key members in their respective local currencies, says Ali Moselhy, Egypt’s Supply Minister.
- According to Moselhy, Egypt is currently engaged in discussions to establish credit lines with India, Russia, and China.
- The objective is to enable Egypt to utilize currencies other than the U.S. dollar for payment of imports.
- Moselhy told Reuters:
“Nothing of the sort has been implemented but there are discussions so that we can trade in local currencies of countries like India, Russia or China.”
- BRICS is a five-member economic and intergovernmental organization, which meets annually to collaborate on improving economic conditions within member states.
- A major contention of the BRICS group since inception, has been to de-dollarize international trade particularly among members.
- Rather than conducting trades in USD, the group expresses a preference for trading in local currencies. Reports suggest that BRICS is considering the development of a new currency, backed by precious metals and other resources, to facilitate international trade.
Why this matters
- A Cambridge study claims the push for de-dollarization by these countries will help them achieve greater financial autonomy and diversify the representation of currencies in the international market.
- However, BRICS’ breakaway from the dollar-dominated international community could see the costs of cross-border transactions increase and capital raising in the dollar-based global market could become more expensive, the study says.
- Several countries seeking to join BRICS have embarked on various de-dollarization endeavors in support of BRICS’ stance to abandon the greenback in favor of local currencies.
- Egypt is the latest country to indicate interest in joining the group, while other countries such as Saudi Arabia, United Arab Emirates, Argentina and Algeria are also on the waiting list to join the group.
- A decision to admit these countries would be made at the group’s summit in August, according to South Africa’s ambassador to BRICS, Anil Sooklal.