GT Voice: It is Urgent for BRICS to Push for Fairer, Safer Global Financial System

By Global Times

Jun 20, 2022 10:07 PM

Photo: VCG

With the 14th BRICS Summit to be held on Thursday, a number of officials and experts have recently voiced their expectations for the BRICS mechanism to play a greater role in promoting fairness and security in the global financial and trade order.

At present, Western sanctions against Russia have sparked multiple crises faced by the global economy, dealing a heavy blow to the international economic and financial order that emerging markets and developing countries rely on for survival. To a certain extent, these sanctions have made BRICS countries aware of the urgency of strengthening their cooperation and solidarity. As major emerging market economies with global influence, BRICS countries now share the common will of pushing forward with major reforms addressing the global payment system.

None of the BRICS countries has joined the Western economic sanctions against Russia. The reason why the BRICS countries apart from Russia all refused to join such sanctions is because they share the same antipathy to unilateral sanctions imposed by the West.

It is now crystal clear that Western powers safeguard their own hegemonic self-interests through sanctions, with no regard for the interests of emerging and developing economies at all and for bringing new uncertainties and risks to the world. Behind the sanctions is the dollar hegemony. 

For decades, the dollar has been the most important reserve currency in the world and the most widely used currency for global economic and trade settlement. The outsized role of the dollar in the global payment system has not only offered the US a huge financial advantage in the world economic order but also enabled it to effectively use it as a weapon to punish its adversaries. Consequently, BRICS' interactions in terms of financial, trade, investment and other areas have often been affected to varying degrees.

It should be pointed out that the purpose of establishing the BRICS was never aimed at forming a small clique targeting other parties. The reason why BRICS countries came together is because of a common need to address the injustice and unfairness in the existing international economic, financial and trade systems and to seek reform and adjustment in the global economic order to address the legitimate concerns of developing countries.

The New Development Bank (NDB), also known as the BRICS Bank, is an important trial by the BRICS member countries to promote not only intra-bloc cooperation but also fairness in the international financial governance, even though, the NDB has had its share of challenges, like its payment mechanism being subject to the US' dollar hegemony. 

Indeed, the financial implications of US sanctions have increased the urgency of de-dollarization around the world. It is not just the BRICS, but also many other developing economies that realize the needs to reduce the role of the dollar in global payments. In bilateral settings, discussions about exploring new currencies for trade settlement are becoming increasingly popular and common, an indication that the US' abuse of its financial power has fueled the trend for de-dollarization.

Therefore, one of the main questions facing the BRICS is how to further integrate these needs among various countries by increasing new currency settlement and building new, safer payment systems, among others. If they can achieve that goal, other developing countries will also join in them when it comes to developing alternative financial infrastructure in response to reckless US sanctions.

So it can be expected that the need for BRICS to step up and strive for a fairer, safer international economic and financial order will become increasingly more urgent. The future of the BRICS hinges on their ability to deepen cooperation and overcome challenges. In any case, there is no way for the global economy to be ruled forever by the arbitrary hegemony of the US dollar.