The BRICS Initiatives for the Transformation of the International Monetary and Financial System (International Journal of Political Economy)

Summary

• BRICS member countries represent around 55% of the global population and approximately 40% of global GDP in purchasing power parity.p.4
• The US dollar is involved in 88% of global foreign exchange transactions, whereas all BRICS currencies combined account for under 15%.p.4
• The New Development Bank has an authorized capital of US$ 100 billion and a subscribed capital of US$ 52.7 billion as of December 2023.p.14
• At the end of 2023, the US dollar alone comprised 67.2% of the total NDB portfolio, while central currencies represented 78.8%.p.4
• The Contingent Reserve Arrangement established a US$100 billion liquidity safety net funded by member contributions.p.16
• Member countries can freely access only 30% of their CRA resources without requesting an IMF monitoring program for the remaining 70%.p.4
• The expanded BRICS bloc controls at least 40% of global oil, gas, and renewable energy sources.p.5

Key insights

1. Dominance of cross-border payment channels and key currencies reinforces structural monetary hierarchies against Global South economies.p.10
2. Sanctions imposed in 2022 highlighted the geopolitical risks of dollar weaponization and restriction from financial messaging systems.p.7
3. The New Development Bank faces a dollar trap because raising international funds creates currency mismatches when lending in local currencies.p.15
4. High domestic interest rates, such as the 14.75% Selic rate in Brazil, make local currency fundraising for development lending prohibitively costly.p.15
5. The Contingent Reserve Arrangement has remained completely unused in its ten years of existence due to operational linkages to IMF structural conditionality.p.4
6. The mBridge multi-CBDC cross-border payment platform explicitly prohibits the use of currencies not issued by its full member countries.p.18
7. Substantial control over global energy supplies provides BRICS countries with strategic leverage to alter trade invoicing and settlement currencies.p.5