Meeting of FMs of BRICS countries
Recently the foreign ministers of BRICS countries have supported the use of local currencies in international trade.
Recently the meeting of Foreign Ministers of BRICS countries has been concluded. A joint statement titled ‘The Cape of Good Hope’ has been issued at the end of the meeting.
Key findings –
- Member countries committed to support rules-based, open and transparent global trade.
- A strong global financial safety net was supported. At its center would be a quota-based and well-resourced International Monetary Fund (IMF).
- The need to use local currencies (de-dollarisation) in international trade and financial transactions was underlined.
- Dedollarization is the process whereby nations reduce their reliance on the US dollar as their reserve currency, medium of exchange and unit of account.
Importance of de-dollarization
- This will reduce the dependence of other countries on the US dollar and the US economy.
- This will reduce countries’ vulnerabilities to currency fluctuations and changes in interest rates.
- This will improve economic stability and reduce the risk of financial crisis.
Steps taken by India to promote internationalization of rupee –
- Recently 18 countries including United Kingdom, Germany, Russia have agreed to do business in Indian Rupee. Indian and Russian banks have opened special Vostro accounts for trading in rupees.
- India’s new Foreign Trade Policy (2023) favors international trade in Rupees.
Source – The Hindu