The new BRICS expansion could lead to a decline in global SWIFT transactions that can inadvertently affect the US dollar. The 9-member BRICS alliance is looking to end cross-border settlements with SWIFT using the US dollar and aims to pay in local currencies. The development adds pressure on the SWIFT payment system leading to a decline in the US dollar-based settlements by BRICS.
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Florida Senator Marco Rubio was the first to warn that BRICS poses a threat to SWIFT and the US dollar. The BRICS expansion will make more countries cut ties with both the US dollar and the global SWIFT payment system.
“BRICS’s members pool foreign currency reserves and lend billions in easy money to pit developing nations against the US and other Western countries,” he said. The Senator added that the expansion gives them more power to challenge the SWIFT system and the US dollar.
“This doubles the trade group’s size, enhancing its attractiveness as an alternative to the American and European-led financial system,” Rubio said.
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BRICS: Russia & Iran End SWIFT System, No Longer Pay the US Dollar
Early this year, BRICS members Russia and Iran officially ended the SWIFT payment system for trade between themselves. Russia and Iran agreed to carry out transactions directly through banks and will settle trade in local currency and not the US dollar anymore. Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade.
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Both Russia and Iran were banned from SWIFT after the US pressed sanctions against the two countries. This made both nations decide not to return to SWIFT and find an alternative to the US payment system. Slowly yet steadily, one by one, BRICS countries are looking at every alternative option to bring down SWIFT and the US dollar.