New York, Monday, October 7, 2024- The BRICS alliance is reportedly considering introducing a “petroyuan” in its latest de-dollarization attempt, ahead of its upcoming summit in Kazan, Russia, next month. The move would replace the dollar-based system for oil transactions with the Chinese yuan, posing a challenge to the U.S. dollar’s dominance in global markets.
The BRICS group—Brazil, Russia, India, China, and South Africa—has been expanding and is looking to diversify away from the dollar, particularly for oil trade. Saudi Arabia, the world’s largest oil supplier, recently expressed openness to alternative currencies like the yuan for oil transactions. Russia, seeking alternatives after facing sanctions and exclusion from SWIFT, is also promoting the use of the yuan.
The Official Monetary and Financial Institutions Forum (OMFIF) states that although the petroyuan could fragment global financial systems, it could also benefit Chinese banks, allowing them to profit from managing yuan surpluses and facilitating oil trade between BRICS members.
However, challenges remain, as excess yuan would need to be recycled into reserves or trade with China.
Also, the Indian position is also not known yet in addition to the fact if the BRICS group is ready to create another petrodollar.
