- Decoupling from the Dollar
- The Rise of UNIT
- Impact on Global Trade
A significant shift is happening in international finance as BRICS nations—Brazil, Russia, India, China, and South Africa, along with members of the Shanghai Cooperation Organization (SCO)—intensify their move towards local currencies, marking an essential component of global economic strategies.
Decoupling from the Dollar
The drive towards dedollarization is gaining momentum. Dmitri Volvach, the Russian Deputy Minister of Economic Development, highlighted a significant increase in the use of local currencies for trade among SCO members—from 40% in 2022 to a remarkable 92% today. This shift predominantly involves major economies such as China and Russia, which have already started settling bilateral trades using the Chinese Yuan over the past year.
The SCO, established in Shanghai on June 15, 2001, initially included Russia, Kazakhstan, Kyrgyzstan, China, Tajikistan, and Uzbekistan. Over the years, the organization has expanded to about 26 countries, including full members and observer states. The increased focus on using local currencies is a strategic response to various global pressures, including trade disputes and geopolitical tensions, underscoring the vulnerabilities associated with reliance on the dollar.
The Rise of UNIT
In a parallel effort to bolster economic independence, the BRICS nations are progressing in developing their proprietary currency, the UNIT. This new stablecoin initiative is envisioned as a key component in the bloc's strategy to create a self-sufficient financial ecosystem. The UNIT is expected to be backed by a basket of currencies and gold, ensuring its stability and reliability in international trade.
The concept of UNIT emerged from the necessity to facilitate smoother and more stable transactions within the bloc, bypassing the fluctuating exchange rates that often complicate trades in local currencies. This initiative is part of a broader push to establish Central Bank Digital Currencies (CBDCs), which are already under development in several member countries, including China, India, and Russia.
Impact on Global Trade
As the BRICS and SCO nations continue to build up their gold reserves and advance their technological infrastructure, the foundation for UNIT solidifies. While specifics of the new currency are yet to be fully disclosed, strategic gold accumulation and detailed planning suggest that the implementation of this new currency system could soon become a reality, reshaping international trade dynamics.
The ongoing dedollarization process, accompanied by the development of the stablecoin UNIT, has the potential to significantly alter the global landscape of international trade, making it more independent from the fluctuations and tensions associated with the US dollar.
