According to reports, the BRICS Alliance is considering a “petroyuan”, its latest attempt at competing with world dollar hegemony.
BRICS was initially launched by Brazil, Russia India China South Africa as a grouping. Since then, several countries have joined the union. The next step will be taken at a Kazan summit, Russia next month.
The Official Monetary and Financial Institutions Forum’s (OMFIF), a think-tank, has released a report stating that the BRICS nations will discuss how they can implement an alternative system to the dollar-based current oil payment system. This could include the Chinese Yuan.
Saudi Arabia has confirmed it’s “open to ideas” in the oil trading industry, which includes using the Yuan.
Russia also looks at the petroyuan to replace the petrodollar and reduce its dependency on the US. The SWIFT system has banned Russian banks since February 2022 due to the conflict with Ukraine.
OMFIF states that implementing the petroyuan would be, in principle, difficult to implement for other countries, as surplus yuan could only be used on trading with China, or placed into foreign reserves. The BRICS financial intermediators would have to then recycle the excesses in order to help other countries.
The Chinese banks will benefit most from the increased role of the Renminbi, as they can make much-needed profits through the recycling process. Western financial intermediaries could join in by arbitraging the oil markets denominated in dollars and renminbi. The introduction of the petroyuan, however, will further fragment the global financial system .”
Bandar Al-khorayef said recently that the Saudi Minister of Industry and Mineral Resources, Bandar Al-khorayef was not concerned about the politics of abandoning the US dollar in oil trade.
BRICS is developing its own currency in order to ease trade amongst themselves. Some reports suggest that the currency will be backed up by gold.
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The post BRICS Mulling Petroyuan in New Dedollarization Attempt Before Next Summit: report may be updated as new developments unfold.
