In a strategic move aimed at fortifying the autonomy of the BRICS nations, the New Development Bank (NDB), often dubbed the BRICS Bank, has unveiled plans to issue its inaugural Indian rupee bond by October. According to a recent report, Vladimir Kazbekov, the astute vice president and chief operating officer of the BRICS Bank, disclosed this significant stride towards financial self-sufficiency.
The NDB, a collaborative venture among Brazil, Russia, India, China, and South Africa, was conceived to pool resources for pivotal infrastructure and sustainable development projects in emerging economies. This consortium took a notable step in 2021 by expanding its membership to incorporate Bangladesh, Egypt, the United Arab Emirates, and Uruguay.
In a press conference on Monday, Kazbekov shared his insights on the bank’s forthcoming endeavor, stating, “We’re going to tap Indian market — rupees — maybe by October in India”. He elaborated on the novel strategy the bank is contemplating, emphasizing the method of using one member nation’s currency to fund projects in another nation. He highlighted the prospect of financing a South African project using the Chinese yuan instead of the US dollar.
The Shanghai HQ is central to boosting local currency lending. Much is in yuan, set to rise from 22% to 30% by 2026. Dilma Rousseff, former Brazil President and bank head, eyes $8-10B lending this year, targeting 30% in local currency. As the 15th BRICS summit unfolds in Johannesburg, one of the key focal points is devising means to curtail reliance on the US dollar. The alliance is firmly committed to promoting the use of native currencies in trade, aiming to fortify their respective economies.
Russian President Vladimir Putin highlighted the consortium’s efforts in cultivating effective mechanisms for global trade settlements and currency exchanges, thereby diversifying financial control. The envisaged payment mechanism is envisaged to circumvent the US dollar and facilitate cross-border transactions through native currencies.
As President Putin underscored, this innovative payment mechanism promises seamless service for businesses, multinational corporations, and enterprising individuals. The mechanism, distinct from the US dollar, is presently under meticulous development. The move towards local currency settlements may have far-reaching consequences. With a combined share of 20% in global exports and a collective population of 3 billion, BRICS countries possess the potential to reshape the financial landscape by reducing their dependence on the US dollar.
