Kofi Mensah Certainly, here is a paraphrased version of the text:
According to ING Bank’s analysts, the growing trend of de-dollarization across the globe may accelerate, driven by the potential expansion of the BRICS alliance. While the notion of a shared currency among the BRICS countries is still ambiguous, some narratives are hinting that the Chinese yuan may become the default replacement for the U.S. dollar.
ING Bank Insights: Rise in De-Dollarization
A newly-released statement from ING Bank has exposed that the de-dollarization movement initiated by the BRICS nations is expected to gain further momentum. The upcoming BRICS summit in Johannesburg this week, involving Brazil, Russia, India, China, and South Africa, where the possibility of including more countries in the bloc will be discussed, could serve as a significant trigger for this trend.
In a recent note, ING Bank’s analysts Chris Turner, Dmitry Dolgin, and James Wilson shared their perspectives, saying:
The issue of ‘de-dollarization’ may likely gain prominence this summer when the BRICS leaders convene.
Several nations, ranging from influential countries like Saudi Arabia to those struggling economically like Argentina and Venezuela, are showing interest in joining the BRICS association. However, no formal structure exists for accepting new members, even though the Brazilian President, Luiz Inacio Lula da Silva, has committed to addressing these matters during the summit.
Chinese Yuan’s Challenge to the U.S. Dollar
Even though conflicting statements have been made about the possibility of a BRICS common currency, the ING analysts believe that the Chinese yuan might play a significant role in the bloc’s existing strategy to move away from the dollar. This has been especially evident in bilateral trade arrangements among the BRICS nations.
For instance, both Brazil and Russia have already adopted the Chinese yuan for settling payments for imports from China, and Indian refiners have utilized it to pay for Russian oil.
Regarding this, the ING analysts observed:
De-dollarization is primarily noticeable in the central banks’ international reserves, where the dollar is gradually being replaced by several other currencies, including the yuan. In the long run, the USD appears to be supplanted mostly by Asian currencies, specifically the CNY and Japanese yen.
Nonetheless, the analysts also noted that the Chinese yuan’s appeal to bond investors is hindered by “a relative scarcity of liquidity and persistent apprehensions about potential capital restrictions.”
Your thoughts on the BRICS expansion and its impact on the ongoing de-dollarization trends are welcome in the comments section below.
Table Of Contents
Frequently Asked Questions (FAQs) about de-dollarization
What is the main prediction made by ING Bank analysts regarding BRICS expansion?
ING Bank analysts foresee that the possible expansion of the BRICS bloc, including Brazil, Russia, India, China, and South Africa, could accelerate the global trend of de-dollarization. The Chinese yuan could play a significant role in this process, serving as a potential substitute for the U.S. dollar.
How might the Chinese yuan be involved in the de-dollarization process according to ING Bank’s analysis?
According to the analysis by ING Bank, the Chinese yuan might become a key player in the de-dollarization process, particularly among the BRICS nations. The currency has already gained momentum in bilateral trade agreements within the bloc, with countries like Brazil and Russia using the Chinese yuan to pay for various imports from China.
What are the potential obstacles to the Chinese yuan becoming an attractive alternative to the U.S. dollar?
The ING Bank’s note explains that the Chinese yuan’s appeal might be limited due to “a relative lack of liquidity and lingering investor concerns over potential capital controls.” These factors could inhibit the yuan’s attractiveness to bond investors, posing challenges to its wider adoption as a substitute for the U.S. dollar.
Are there any formal plans for new countries to join the BRICS group?
Several countries, including Saudi Arabia, Argentina, and Venezuela, have expressed interest in joining the BRICS group. However, as of the information provided, there is no established framework for adding new members. The subject is expected to be discussed during the upcoming BRICS summit in Johannesburg, as indicated by Brazilian President Luiz Inacio Lula da Silva.
More about de-dollarization
- ING Bank’s Official Website
- BRICS Summit in Johannesburg
- Information on Global De-Dollarization Trends
- Analysis of Chinese Yuan in International Trade
- Brazilian President Luiz Inacio Lula da Silva’s Statements on BRICS Expansion
5 comments
What about other Asian currencies like the Yen? ING seems to be focusing a lot on the Yuan. Kind of biased maybe.
BRICS expansion is a complex issue, some countries could really benefit but others could be lef behind, Thoughts?
This is exactly what I’ve been saying. The days of dollar dominance are numbered. BRICS is gonna lead the way. Great article btw!
Interesting article, but i don’t get why China gets to call the shots with the yuan? need to read more about it…
This BRICS thing is realy big, its gonna change everything. The USD is going down mark my words!