BRICS Summit Will Discuss Using Local Currencies for Trade, NDB Credit for Businesses
July 4—Harvansh Chawla, Chairman of the BRICS Chamber of Commerce and Industry (CCI), told India Today magazine on July 2 that the BRICS members states have decided that the BRICS’ New Development Bank (NDB) should be geared up to provide credit to businesses in the BRICS nations in local currency, in light of the U.S. trade war. The BRICS CCI is a BRICS-wide body, but its leadership is largely from India, as in the case of its current Chairman Chawla.
Indian Prime Minister Narendra Modi’s participation in the BRICS Summit in Rio on July 6-7 has a “huge significance,” Chawla told the India Today reporter. “This is the right platform where the countries can insulate themselves, get together, and figure out the way to deal with the U.S. tariff trade war.” He also emphasized that India will chair the BRICS in 2026.
NDB to Will Loan in Local Currency
The reporter commented that the NDB is much discussed these days, asking Chawla about the importance of the NDB with regard to that tariff war. Chawla answered that the NDB was formed almost 10 years ago, “but never gained momentum.” However, due to the U.S. trade war, now “it has been decided by the members of the BRICS countries that the NDB will be giving loans and credit facilities to industrialists and businesses in local currency.” Using local currency means that “dependency on the U.S. dollar will reduce substantially,” and less dependency will support the profitability of those businesses, “so it will benefit all BRICS member countries,” he added.
Trade in local currency has limited defensive use in today’s crisis. Whether there will also be a discussion of how the NDB can take on a broader role as a serious source of vastly increased credit flows for development in BRICS and other countries, remains to be seen. For example, Russian President Vladimir Putin, when addressing the Eurasian Economic Union Summit in Minsk last week, emphasized that the BRICS are working on creating “a digital investment platform,” a proposal he first made at the close of last year’s BRICS summit in Kazan, Russia.
BRICS as a Challenge for Existing System
Sources close to the BRICS leaders say that the Russians in particular, right now, want the BRICS to appear less threatening to the developed nations, especially the United States. With that in mind, these sources say that the BRICS will downplay that which appears to place them as an alternative to the existing monetarist global system, run effectively by the City of London and Wall Street. The sources say that there is a desire by the Russians and to the Chinese as well to not speak about replacing the existing system, but instead to seek reforms which would allow the BRICS to function under that system. Neo-con advisors to President Donald Trump have repeatedly warned that the BRICS represents an attack on the US-dominated world financial and trading system, and have sought a policy in opposition to the BRICS from Trump, claiming that it is a Russian and Chinese clone intended to weaken US economic power globally, and especially in the developing sector nations of Africa, the Americas, and the Pacific.
Trump has thus far resisted, personally, doing more than just talking, while the State Department and Treasury seem to follow the "war on the BRICS" line.
"Regardless of the way they want to dress up the BRICS and its leading institutions such as the NDB," said a source, "it does represent a defacto challenge to the existing system, as it does not demand austerity measures as a basis for providing lending for viable projects."