Will the Brics summit in Russia succeed in ushering in a new world order?

Russia’s call on Brics Group partners to create an alternative to the International Monetary Fund (IMF) signals a critical move by the emerging powerful alliance to step up a campaign to usher in a new world order to replace the 80-year-old Bretton Woods financial architecture.

The call by Russia, ahead of Brics leaders’ summit in Russia from October 22 to 24, comes as a de-dollarisation campaign orchestrated by the group gains increasing momentum.

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Brics, originally comprising Brazil, Russia, India, and China, has expanded to include the UAE, South Africa, Egypt, Ethiopia, Iran, and Saudi Arabia. The group has been working on a new currency – potentially gold-backed – designed to end its dependency on the US dollar.

The ‘weaponisation’ of the US dollar by the US and allies against their adversaries has been threatening to undermine the greenback’s dominance. Analysts believe that using the world’s top reserve currency as a financial weapon has accelerated a move already initiated by many countries to diversify investments into alternative currencies.

The dollar, still the top reserve currency held by central banks, has been losing share in bits and pieces ever so slowly against a mix of other reserve currencies as central banks diversify their holdings of dollar-denominated assets to assets denominated in other currencies. And they’re also adding to their holdings of gold. Over the past 10 years, the dollar’s share has dropped by about 8.0 percentage points, from 66 per cent in 2015 to 58.2 per cent in 2024 so far. If this pace continues, the dollar’s share will kiss 50 per cent in 10 years.

At a meeting of top Brics finance and central bank officials last week, Russian Finance Minister Anton Siluanov, who hosted the meeting, said Western countries control the global financial system and that the group, which represents 37 per cent of the global economy, needs to create an alternative.

“The IMF and the World Bank are not performing their roles. They are not working in the interests of Brics countries,” Siluanov said. “It is necessary to form new conditions or even new institutions, similar to the Bretton Woods institutions, but within the framework of our community, within the framework of Brics,” Siluanov added.

The timing of the Russian call is also important as a standalone payment system dubbed the “Brics Bridge” is gaining support.

The only financial institution the Brics countries have established so far is the New Development Bank, created in 2015 to finance infrastructure and sustainable development projects in member countries and other emerging economies.