BRICS Backs Local Currencies to Cut Trade Costs

BRICS countries are working to increase the use of their local currencies for trade settlements in a move aimed at reducing transaction costs and making trade between member countries easier.

Shri Sudhakar Dalela, Secretary of Economic Relations at India’s Ministry of External Affairs, disclosed this in an interview on the sidelines of the 18th BRICS Summit in New Delhi on Saturday.

BRICS is a group of emerging economies that cooperate on economic, political and development issues.

The group originally consisted of Brazil, Russia, India, China and South Africa. It has since expanded to 11 full members: Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, the United Arab Emirates, Saudi Arabia and Indonesia.

Dalela said BRICS members had been discussing ways to use local currencies to make trade between them easier and cheaper.

He explained that allowing countries to settle some trade transactions in their own currencies could help reduce the costs involved in international payments.

“Local currency settlement is a practical mechanism to reduce transaction costs and bring bilateral trade,” he said.

According to him, the use of local currencies is being considered as an additional option alongside the existing global payment system.

He said BRICS members were also exploring bilateral agreements and other payment arrangements to address challenges associated with settling trade between countries.

Dalela added that the broader goal was to increase trade, strengthen economic ties with the global business community and reduce transaction costs.

However, he clarified that BRICS countries are not currently planning to introduce a common currency.

“There is no proposal for fixed currency as of now,” he said.

Dalela said discussions on local currency settlements and other payment mechanisms would continue as part of BRICS’ efforts to improve trade and financial cooperation among member countries.