Summary
Countries in the Global South are exploring alternatives to the U.S. dollar (USD) for international trade. This includes using China's Cross-Border Interbank Payment System (CIPS) and local currencies for trade, particularly among BRICS nations. These moves aim to reduce dependency on the USD in global trade.
Key Facts
- South African and Chinese central banks launched a new payment system aimed at reducing reliance on the USD.
- Standard Bank in Africa now connects directly to China's payment system, allowing trade in Chinese renminbi.
- BRICS nations are seeking to use local currencies for trade to avoid USD dependency.
- Countries like India, UAE, Brazil, and China are actively trading with one another in their local currencies.
- China and Russia are shifting their trade to local currencies, partly to avoid Western sanctions.
- BRICS is working on a digital currency system called Bridge to bypass USD and SWIFT for international payments.
- Over the last decade, China has become a leading trade partner in the Global South, reducing U.S. trade influence.
- Analysts note hidden costs exist when trading in USD, benefitting the U.S., and countries are seeking alternatives.
