An agreement to this effect is expected to be signed during a BRICS summit which is due to be held in New Delhi on March 29. Experts say that this agreement will mark an important stage in the development of the organisation which brings together Brazil, Russia, India, China and South Africa.
The proposal to move away from the use of the dollar had come from China, which is currently the world’s largest holder of dollar-denominated assets. Beijing has repeatedly declared its desire to reduce the risks associated with the current economic woes in the United States. With the US’ state debt already exceeding 15 trillion dollars, Beijing’s stance on the matter is understandable and consistent, Moscow-based economics expert Alexander Osin said in an interview with the Voice of Russia aired on Tuesday.
"In effect, China is saying that the US economy is currently ineffective and prone to risks, Osin says. Currently. China holds three trillion US dollars in reserves, and Beijing is loath to lose them without creating a safety net. To this end, China is creating a mechanism of interaction with alternative importers of its production, as well as those countries which supply raw materials to China, Osin concludes."
Last year saw the signing of a framework agreement between BRICS countries on a shift to the use of national currencies in mutual trade. China, in turn, signaled its readiness to allocate 10 billion yuan to a special fund, which Russia has also agreed to finance. Meanwhile, experts remain at odds over the possible risks of signing the 29 March agreement. As far as Russia is concerned, the consequences could be unpredictable, according to Nikita Krichevsky, head of the Institute of National Strategy in Moscow.
"The dollar still dominates the bulk of raw material markets, Krichevsky says, admonishing attempts to scrap the dollar as the main global reserve. Of course, he adds, Russia could use its national currency in mutual trade, but there is a big question mark over the feasibility of such a step."
In the meantime, Moscow and Beijing have announced that the question of convertibility of the BRICS countries’ currencies could be resolved in the near future. Moscow-based finance expert Roman Andreyev, on his part, welcomes Russia’s and China’s drive to promote their national currencies. The two countries are already using the rouble and the yuan in bilateral cross-border trade, Andreyev adds.
"The fact that BRICS countries are moving away from the use of the dollar is only natural, he says, adding that the move will contribute to a more stable world economy. The BRICS countries' national economies will also benefit from the step," Andreyev concludes.
In any case, it is too early to speak of a complete switch to the use of national currencies in trade and crerdit lines, experts say, referring to BRICS countries’ current economic priorities. Currently, the US remains China’s principal trade partner, while the EU is Russia's principal . However, the past few years have seen Russia actively promote its economic interests in the Asia-Pacific region – something that comes amid China’s drive to expand its foothold in Africa.