BRICS De-dollarization Hype — But Will Reality Begin to Dawn, that Nothing New Is on the Table, Really?

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Transcript by CGTN

China and Brazil are members of the BRICS group, which established the New Development Bank in 2015 to fund development projects in emerging markets and developing countries. Now a former Brazilian president has become the new head of the multilateral bank. Wu Lei sat down with Dilma Rousseff to discuss her priorities during her term in office. 

WU LEI CGTN Reporter: “As former president of Brazil, and economist who has been active in global development for a long time, what will be your priorities in terms of the NDB’s development in the coming years?”

DILMA ROUSSEFF President, New Development Bank: “It is very important to me that the New Development Bank, the bank of the BRICS, acts as a tool to support the development priorities of the BRICS and other developing countries.

We need to invest in projects that contribute to three fundamental areas. First, we need to support the countries with regards to climate change and Sustainable Development Goals. Second, we should promote social inclusion at every opportunity we have. And I believe we should finance their most critical and strategic infrastructure projects, and digital ones.

That said, we want to promote quality development.

Developing countries still don’t have the necessary infrastructure. They don’t have enough ports, airports and highways to meet their needs. And, many times, the ones they have are not adequate. They still have to build alternative and more modern models of transportation, for instance. I see China a country that has developed capability for alternative transportation at the scale and quality it needs. NDB has to support the other countries to also build their quality infrastructure as well, like high speed trains.

It is also very important to invest in technology and innovation. Invest in universities, for example. Our countries will not overcome extreme poverty if we don’t invest in education, science and technology.”

WU LEI CGTN Reporter: “What are some of the challenges the NDB faces now, given the current global situation? What role does the BRICS cooperation mechanism play?”

DILMA ROUSSEFF President, New Development Bank: “The world now is under the threat of high inflation and restrictive monetary policy, particularly in developed countries. Such monetary policy means a higher interest rate and, therefore, a higher probability of a reduction in growth and a higher probability of recession.

This presents an important question for the BRICS. We need a mechanism, a so-called anti-crisis mechanism, which must be countercyclical and support stabilization.

At the same time, it is necessary to find ways to avoid foreign exchange risk and other issues such as being dependent on a single currency such as the US dollar. The good news is that we are seeing many countries choosing to trade using their own currencies. China and Brazil, for instance, are agreeing to exchange with RMB and the Brazilian Real.

At the NDB, we have committed to it in our strategy. For the period from 2022 to 2026, NDB has to lend 30 percent in local currency, and so 30% of our loan book will be financed in the currencies of our member countries. That will be extremely important to help our countries avoid exchange rate risks and shortage in finance that hinder long term investments.”

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Patrick Bond, Professor, University of the Western Cape School of Government. He is a regular contributor to Global Research. 


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Articles by: Prof. Patrick Bond

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