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- President Vladimir Putin of Russia is pushing BRICS to invest in developing economies.
- While not abandoning the US Dollar, the quest for financial independence is core to the BRICS alliance.
BRICS, an intergovernmental organization, has proposed creating an investment platform to support developing markets. The BRICS nations comprise Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates.
BRICS Targets Digital Assets Under New Investment Platform
Russian President Vladimir Putin discussed the proposed creation of a BRICS investment platform during the Valdai Discussion Club’s plenary session in Sochi on Friday. “We suggest creating a new investment platform of (BRICS countries), using electronic assets, developing them,” Putin emphasized.
According to Putin, the goal is to establish an electronic payment infrastructure that allows investment in developing countries in South Asia, Africa, and Latin America. The proposed platform would employ a digital framework, encouraging investments from BRICS nations into high-growth areas. This development would allow for more efficient investment in these areas.
Putin noted that the targeted regions for the proposed new platform exhibit strong demographic and economic potential. The Russian leader thinks these regions’ population growth, capital accumulation, and urbanization level make it attractive for BRICS investment.
It is worth noting that the alliance initially comprised Brazil, Russia, India, China, and South Africa. However, in January, the bloc expanded to include more countries: Egypt, Ethiopia, Iran, and the United Arab Emirates (UAE). The group aimed to boost its global economic and political influence with this expansion.
Furthermore, the organization extended partnership invitations to 13 additional countries at the recent BRICS Summit, held from October 22 to 24 in Kazan, Russia. Members’ expansion plans at the event also include developing alternatives to Western-dominated payment systems to boost financial independence.
Putin has also clarified Russia’s position on the US dollar. While Russia still faces restrictions on the dollar’s use, Putin disclosed that the country does not intend to abandon the currency. He criticized US regulations that limit dollar use, claiming they undermine American financial power.
Is the BRICS De-dollarization Strategy in Trouble?
In the past decade, the BRICS alliance has consistently pushed for “de-dollarization” to reduce dependency on the U.S. dollar in global trade and finance. As noted in a CNF post, BRICS’s financial strategy focuses on several key initiatives.
Firstly, Russia has proposed using multicurrency payments in BRICS to minimize dependence upon the US dollar. The proposal seeks to enhance economic relations within the bloc and promote intra-bloc dealings in local currencies. It also includes creating a new trading platform for major goods to boost trade within the BRICS nations, including oil, gas, grains, and gold.
Additionally, Putin unveiled a “BRICS Bill” at the Kazan summit to reduce reliance on the U.S. dollar. Despite these moves, challenges arise due to the dollar’s entrenched role in emerging markets and finance.
Meanwhile, Donald Trump also made it clear during his campaign that he would push to keep the US dollar as the world’s reserve currency if he wins the Presidential election. During a rally in Wisconsin, Trump said countries turning away from the dollar will face consequences. The BRICS may likely face hurdles now that Trump has won the election.
