On 29 March, China intends to sign a memorandum in New Delhi with its Brazilian, Russian, Indian and South African BRICS counterparts to make national currency loans available within the bloc. This will reduce the influence exerted by the U.S. dollar in BRICS, while promoting use of the national currencies, primarily the yuan. Yet, for India and Russia, settlements with China in national currencies will only have political advantages in a few years time.
The Financial Times has reported that the China Development Bank (CDB) intended to sign a memorandum of understanding with the BRICS partners India, Russia, Brazil and South Africa at the next BRICS summit, slated for 28-29 March. The document is expected to be signed on the final day of the event.
The document will enable the CDB to extend loans to its partners in renminbi, China’s national currency. The development banks of the other member states that sign the document will be able to lend to other BRICS economies in their own national currencies – these include Russia’s Vnesheconombank, the Export-Import Bank of India, Brazil’s BNDES and the Development Bank of South Africa.
The Financial Times believes that the Chinese initiative is a result of the country’s intention to promote use of the yuan internationally and compete with the U.S. dollar for leading positions globally. Read More