BRICS invites six new members as de-dollarisation debate continues

Leaders of Brazil, Russia, India, China and South Africa agreed on Thursday to invite six countries to join the BRICS group: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. Membership is set to take effect from January next year.

The expansion would bring major energy producers into the group and increase its share of global population and output. Supporters present it as a sign of a shifting balance of power in the world economy.

In the run-up to the summit, there had been speculation about a common BRICS currency. No such plan was announced. Instead, leaders discussed expanding the use of local currencies in trade and investment and asked finance officials to study payment options. Economists point to several constraints on moving away from the dollar:

• Deep and liquid US financial markets have no equivalent elsewhere
• Member countries have different economic interests and political systems
• Many trade contracts, especially in commodities, are still priced in dollars

Sanctions on Russia after the invasion of Ukraine have increased interest in alternatives. Some trade between Russia and China is now settled in yuan.

The dollar's role is unlikely to change quickly, but the summit shows that its dominance is increasingly a political question, not only a financial one.