De-Dollarization on agenda at BRICS summit in South Africa

The BRICS nations -- Brazil, Russia, India, China, and South Africa -- are pushing to dethrone the U.S. dollar as the world’s largest reserve currency and establishing a common currency.

The 15th summit of BRICS heads of state will be held in South Africa's capital Johannesburg from August 22 to 24, with Chinese President Xi Jinping, Brazil's Luiz Inacio Lula da Silva and Indian Prime Minister Narendra Modi in attendance.

The push for de-dollarization among BRICS nations has heated up since the war in Ukraine began, as Western sanctions on Russia were enabled by the dollar’s dominance.

In April, Brazilian President Luiz Inácio Lula da Silva urged the group to develop a serious alternative to the dollar using the combined weight of their economies.

Nearly 60% of global currency reserves were held in U.S. dollars in 2022, and 88% of international transactions used the dollar, according to IMF data.

“The other issue that’s going to be talked about is the currencies that countries trade in and talk about more trade in local currencies rather than U.S. dollars,” said Steven Gruzd, an analyst at the South African Institute of International affairs.

Already, BRICS accounts for some 40% of the world’s population, and an estimated one-quarter of global gross domestic product.

In terms of purchasing power parity, BRICS countries now have a larger share of global economic activity than G-7 countries.

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