Banco dos Brics President Dilma Rousseff said Tuesday that one of her goals is to expand the financial institution and does not rule out considering the idea of a single currency between the countries of the bloc.
Dilma gave her first press conference in Shanghai, at the bank’s headquarters, since she took over as president of the institution in April. This week, the NDB the official name of the bank held its annual meeting.
According to the former Brazilian president, one of her missions is to “expand the bank to other countries in the Global South.” “This is very important. This will be done in perfect coordination with the Board of Governors,” he stated. For them, this expansion will strengthen the potential of the FIS.
Joining the bank does not mean joining the Brics countries, a bloc made up of Brazil, Russia, India, China and South Africa. But his speech comes a day after President Luiz Inácio Lula da Silva defended Venezuela’s accession to the Brics and while behind the scenes the criteria and conditions for countries to join the burgeoning bloc are being negotiated. Saudi Arabia and Argentina are also among the potential candidates.
Another Rousseff priority is increasing the supply of credit in local currencies.
“My main task is to help the bank become stronger, first of all,” explained the Brazilian. One of the mechanisms for doing this is to improve the ability to raise funds in all markets, based on all currencies dollars, euros and the local markets’ alternative currencies. “Our currencies from each country,” he said.
She also notes that lending in local currencies is one of the priorities, noting that Brics countries’ currencies are nonconvertible.
“So when they borrow money, they borrow money in currencies that have nothing to do with them, like the dollar or the euro. And they face problems arising from crises, which are based on exchange rate problems and have to absorb all the shocks and fluctuations that accompany them.” “That can happen when monetary policy changes direction,” said Dilma, citing the changes in the US as an example Monetary policy in recent months.
In their opinion, operating with local currencies will allow for more resistance to local businesses.
When asked about the possibility of creating a single currency, Dilma did not rule it out. “It’s still an idea,” he said. “It has to be taken into account. The world is changing. It’s not about exchanging one currency for another. This is not a discussion. We would like to add. We will continue to seek the dollar market. But we will take into account that the Asian market and local currencies are very important,” he said.
In Brazil, the bank has provided $5.9 billion in loans for various projects since 2018 so far. So far in 2023, only one project has been funded by the institution in Brazil, involving the expansion of the water and sanitation network in Pernambuco and worth $202 million.
“We know that the world will move to digital currency,” said Dilma, who foresees it could happen multilaterally, in the Brics states, or in some other model. “A multilateral currency will emerge. And I think this digital currency will emerge. If they exist, several countries will use them for trade,” he predicts.
In her opinion, after the financial crisis of 2008 and the regionalization of trade, the trend towards using local currencies gained strength. Rousseff also points out that the Chinese and Saudis have also reached an agreement to allow oil from the world’s largest fuel exporter to be traded in yuan.
In 1945, the former president recalled, it was an agreement between the Americans and Saudis to buy oil in dollars that gave US currency hegemony. “Today the situation is different,” he said.
In Brazil, the bank has provided $5.9 billion in loans for various projects since 2018 so far. So far in 2023, only one project has been funded by the institution in Brazil, involving the expansion of the water and sanitation network in Pernambuco and worth $202 million.
Dilma criticizes international governance
Dilma also criticized the fact that the resolutions of the G20 following the 2008 crisis had not been implemented in recent years. The result, they believed, was the return of instability, with high levels of debt, speculation and poor quality banking supervision.
In your opinion, American banks would be victims of this scenario. “Whether it will be a credit crunch remains to be seen. But it has complex implications for other economies,” he warned. In the case of emerging markets, the impact would be “serious” with hyperinflation and a debt crisis.
For the former Brazilian President, there remains a crisis of confidence in international organizations and the urgent need for reform of the United Nations.
“The UN Charter must be respected,” he said. “However, we see that the United Nations is unable to position itself in the face of geopolitical conflicts,” he warned.
She still remembered the “terrible situation” that Cuba was experiencing. “The small island of Cuba has been sanctioned for 60 years. For 40 years, the UN voted against sanctions. And nothing was done,” he lamented.
“We need better governance to be respected. The WHO must be respected. We saw it with the pandemic. We have seen it in the case of the vaccines that have not arrived,” he stressed.