{"id":33108,"date":"2024-12-03T18:25:26","date_gmt":"2024-12-03T12:55:26","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=33108"},"modified":"2024-12-10T20:39:20","modified_gmt":"2024-12-10T15:09:20","slug":"donald-trump-threat-brics-over-currency","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/03-12-2024\/donald-trump-threat-brics-over-currency","title":{"rendered":"Donald Trump Threat to BRICS Over Currency"},"content":{"rendered":"\n<p><strong>Syllabus :GS 2\/IR<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In News<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>US President-elect Donald Trump warned the <a href=\"https:\/\/www.nextias.com\/ca\/editorial-analysis\/26-08-2023\/expansion-of-brics\"><strong>BRICS nations (Brazil, Russia, India, China, South Africa) <\/strong><\/a><strong>with 100% tariffs<\/strong> if they create a new <a href=\"https:\/\/www.nextias.com\/ca\/editorial-analysis\/26-08-2023\/expansion-of-brics\">BRICS <\/a>currency or replace the US dollar as the global reserve currency.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>BRICS Currency and US Dollar Dominance:<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The BRICS nations, in light of rising geopolitical tensions and the shortage of US dollars, are exploring alternatives to the US dollar for global trade.\n<ul class=\"wp-block-list\">\n<li>Diverging economic structures, different monetary and trade policies, and other complexities make the creation of a common BRICS currency a long-term goal.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Global Currency Trends:<\/strong><br>&#8211; The IMF\u2019s COFER report shows a decline in the US dollar\u2019s share in global reserves, while non-traditional currencies (e.g., Australian dollar, Chinese renminbi) are gaining market share.<br>&#8211; Renminbi internationalization efforts by China are also advancing, but its share of reserves has stalled.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India&#8217;s Approach:<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India is exploring integration into the recently launched BRICS Pay Card, designed to facilitate token retail payments, enhance tourism, and promote financial integration.<\/li>\n\n\n\n<li>India does not aim to displace the US dollar but seeks to address practical challenges like trade partners\u2019 currency shortages, blocked financial channels, and issues related to &#8220;weaponized&#8221; currencies.<\/li>\n\n\n\n<li><strong>Focus on Economic Diplomacy:<\/strong> India advocates for practical solutions such as settling trade payments in rupees, especially with countries facing dollar liquidity issues or sanctions.<\/li>\n\n\n\n<li>India acknowledges the stability provided by the US dollar and does not seek immediate de-dollarization.<\/li>\n\n\n\n<li>India\u2019s Prime Minister Narendra Modi stressed that BRICS should not aim to replace global institutions.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Initiatives for Rupee Internationalisation<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Special Vostro Accounts:<\/strong> To facilitate rupee-based trade settlements, India has introduced special vostro accounts to mitigate exchange rate risk, reduce transaction costs, and bolster forex reserves.<\/li>\n\n\n\n<li><strong>Targeting Global South<\/strong>: India aims to support countries with dollar shortages (e.g., Sri Lanka, Maldives) and those facing Western sanctions (e.g., Russia, Venezuela).<\/li>\n\n\n\n<li><strong>Central Bank Digital Currency (CBDC)<\/strong>: India is advancing its CBDC initiative to streamline cross-border payments, enhance security and transparency, reduce reliance on intermediary banks, and keep pace with the global digital economy.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Approach on US Dollar<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s External Affairs Minister Jaishankar stated that <strong>avoiding the US dollar is not part of India\u2019s policy <\/strong>but efforts are made to find alternatives in specific cases due to US policies complicating trade with some countries.\n<ul class=\"wp-block-list\">\n<li>India does not have malicious intent towards the dollar, but supports a multipolar world reflected in currencies and economic dealings.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Challenges in Bilateral Trade with Russia<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Despite efforts, India\u2019s trade with Russia in rupees remains low due to Indian banks&#8217; fear of US sanctions and an imbalanced trade relationship with Russia.<\/li>\n\n\n\n<li>Russia has large reserves of rupees but uses them for investment in Indian stocks and bonds instead of settling trade.<\/li>\n\n\n\n<li><strong>China\u2019s angle : <\/strong>Trade between Russia and China in domestic currencies (rouble and yuan) has surged, with over 90% of trade now settled in these currencies.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Future of BRICS Currency and Global Financial Landscape:<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>China might dominate BRICS currency initiatives, which could shift the power balance within the bloc.<\/li>\n\n\n\n<li>India should diplomatically engage with the US to explain its position and promote multipolarity.<\/li>\n\n\n\n<li>India should support financial reforms within BRICS but maintain strong ties with the US to balance its strategic and economic priorities.\n<ul class=\"wp-block-list\">\n<li>Efforts to promote digital currencies (CBDCs) and platforms like UPI could position India as a leader in the BRICS currency initiatives.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: IE<\/strong><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>US President-elect Donald Trump warned the BRICS nations (Brazil, Russia, India, China, South Africa) with 100% tariffs if they create a new BRICS currency or replace the US dollar as the global reserve currency.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-33108","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/33108","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=33108"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/33108\/revisions"}],"predecessor-version":[{"id":33518,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/33108\/revisions\/33518"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=33108"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=33108"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=33108"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}