Head of the Monetary Policy Department at the Gaidar Institute, Evgeny Goryunov, spoke about the direction of monetary and financial integration of the BRICS community. One of the reasons for the increased interest of the BRICS+ countries in currency integration is the political risks associated with the use of developed countries' currencies, primarily the US dollar. It is assumed that currency integration will be accompanied by more active de-dollarization in the BRICS+ countries.
With the overall growth of non-US residents' investments in dollar-denominated assets (the US Treasury bond portfolio increased from $5.8 trillion in 2013 to $8.2 trillion in early 2024), the dynamics of these investments are uneven across the BRICS countries. China continues to reduce its dollar investments (at their peak in 2021, Chinese investments in US federal debt amounted to $1.065 trillion, and by the end of 2023, they had fallen to $816 billion), and Brazil is pursuing a similar policy (investments have fallen from $318 billion at their peak in mid-2018 to $230 billion by the end of 2023). India, on the contrary, is increasing its portfolio of dollar-denominated assets: over the past five years, from 2018 to 2023, investments have grown by $90 billion, and Indian investors currently hold $230 billion worth of US bonds. Thus, it is premature to talk about a large-scale trend away from the dollar in the BRICS+ countries.
Realistic areas for monetary and financial integration within BRICS+ include expanding the use of national currencies (including through central bank digital currencies) in settlements between member countries, supported by swap lines between central banks, developing their own financial/payment infrastructure, autonomous from the infrastructure of developed countries, and facilitating mutual access to financial markets. A synthetic non-cash unit of account (similar to the European ECU) could have some limited use (if created), but a more likely scenario is the expansion of the use of the yuan in transactions within the community (including as a key currency).
Mutual investment within BRICS+ is stagnating, so the key currency will primarily serve trade transactions. Given the size of the Chinese economy and the relatively small, albeit growing, share of China's foreign economic transactions with BRICS+ countries (no more than 15% of foreign trade turnover), the yuan has high potential as the key currency of the community. The decisive factor in the BRICS+ yuanization scenario could be China's decision to expand its national currency internationally, but it appears that no such decision has been made at this time.
Monetary and financial integration within BRICS+ is likely to see some progress, mainly in the direction of wider use of national currencies in bilateral settlements and the development of infrastructure to support these settlements. Given the large size of the Chinese economy and the diversified structure of its exports, there are prerequisites for the yuan to occupy a dominant position within the BRICS+ community and play the role of a key reserve currency.