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BRICS New Development Bank Heralds a Momentous Change

Updated: Apr 27, 2023

The New Development Bank (NDB), founded by the BRICS group, now accepts local currencies for its loans in a daring step that confronts the US-dominated World Bank.

In order to effectively move away from utilising the US dollar in international trade, NDB President Dilma Rousseff has revealed that the bank wants to give 30% of loans in local currencies of its member nations. Rousseff, who led the NDB beginning in March 2023 and was president of Brazil from 2011 until her impeachment in 2016, believes that using local currencies is crucial for lessening reliance on the US dollar.

The BRICS nations will be able to trade with one another and do business without having to change their local currencies into US dollars thanks to the usage of local currencies. China and Brazil are two prominent instances of nations that have already embraced trading in their respective currencies, the Chinese yuan and the Brazilian real, respectively.

In her words: The NDB's decision to change its focus to local currencies underlines the rising desire on a worldwide scale to counterbalance the dominance of the US dollar. The BRICS nations have pushed for a more equitable monetary exchange system to counteract the US dollar's hegemony. The current arrangement disadvantages wealthier nations, posing difficulties for emerging countries that must make payments in dollars at a higher cost.

As it happens, the NDB's campaign for financing in local currencies heralds a momentous change in the world of finance, opening the door to greater financial independence for the BRICS nations and beyond. As other nations indicate interest in joining the expanding network, the movement away from the US currency in international trade is gaining momentum.

Other countries are likewise trying to lessen their reliance on the US dollar as part of the global trend towards de-dollarization. While Russia and China have been growing the use of their respective currencies in bilateral trade, the European Union has been looking into the idea of developing an alternative payment system to get over US sanctions on nations like Iran.

The US government has reacted quickly to the issues presented by the movement towards de-dollarization. The US has exerted pressure on other countries to maintain their usage of the US dollar and has levied economic sanctions on those who have tried to do so.

The NDB's choice to accept local currencies for its loans represents a significant step in the direction of lessening the US dollar's hegemony over the world. De-dollarization is progressing, and an increasing number of nations are expressing interest in joining the expanding network. Even though there are obstacles to overcome, the trend towards financial independence is favourable for the world economy and could result in a more equitable system of exchange for money.


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