At the BRICS summit held on October 23, Brazilian President Lula reiterated the importance of establishing a payment and settlement mechanism that substitutes the U.S. dollar with local currencies. He emphasized that emerging economies should reduce their dependence on the dollar and promote a multilateral international financial order.
During the meeting, Lula stated, "Now is the time to create an alternative payment mechanism to the dollar, which does not mean replacing our currencies. We must ensure that a multilateral international order is reflected in the global financial system." He urged nations to implement this plan as soon as possible and to ensure that the necessary technologies possess sufficient reliability and maturity to support the smooth operation of this new mechanism.
As the newly appointed chair of BRICS, Brazil plans to accelerate the implementation of local currency trading mechanisms and expand the scope of operations for the New Development Bank, which is headed by former Brazilian President Dilma Rousseff. Lula highlighted the significance of BRICS nations in the global economy, noting that their combined economic output accounts for 36% of global GDP and that they possess a majority of rare earth and other critical mineral resources.
The existing interbank cooperation mechanisms have already provided local currency financing solutions for small and medium-sized enterprises, aiming to break the dominance of traditional Western financial institutions, such as the World Bank and the International Monetary Fund. His goal is to "strengthen cooperation among global South countries and achieve a more inclusive and sustainable global governance."
Brazil's advocacy at this BRICS summit reflects the urgent need for reform in the global financial system, driven by emerging economies seeking to establish local currency settlement mechanisms and reduce reliance on traditional Western financial systems. This initiative may signal a shift in the international financial landscape and create new opportunities for cooperation among developing countries.
Picture Source：美联社