News has emerged that Thailand has applied for BRICS membership. The country initiated the mBridge cross border central bank digital currency project along with Hong Kong. Apart from Hong Kong, all other central bank mBridge members are also part of BRICS — China, the UAE, and Saudi Arabia.
One could argue that Hong Kong, being part of China, is technically part of BRICS. However, it remains a special administrative region, including for economic purposes. The mBridge project is run as part of the Hong Kong BIS Innovation Hub, and it recently launched a minimum viable product (MVP).
“We hope to receive positive feedback and be accepted as a BRICS member as soon as the next summit to be held in Russia,” said Thai foreign ministry spokesperson Nikorndej Balankura. Malaysia also announced plans to apply soon. Additionally, in February South Africa reported that 34 countries had expressed interest, indicating a possible queue.
In January BRICS doubled its membership from the original five members — Brazil, Russia, India, China, and South Africa — with the new additions of Iran, Saudi Arabia, the UAE, Ethiopia, and Egypt.
Local currencies settlement for trade
One current BRICS goal is to increase the use of local currencies for trade. There has been some discussion about a BRICS Bridge digital currency platform to support trade with local currencies. Speaking to Chinese news outlet Guancha, Malaysia’s Prime Minister Anwar Ibrahim noted an increased adoption of local currency.
He said that local currency “trade with China has reached 18% to 20%, and the same is true with Indonesia and Thailand. It’s a very good start. I think we still have room to improve and strengthen this cooperation and start to attract more participants.”
“The dollar still has its role, but if we use our own currency for trade, we can greatly reduce the impact of the dollar on our economy and hope that our trade system can mature and build a new Asian financial system,” said Anwar.
The prime minister also recently revived the concept of an Asian Monetary Fund to reduce dollar dependence. “Of course, people will say that we don’t want China to dominate. I say that there must be an independent, professionally operated institution. I think China’s participation is crucial to ensure the success of this idea,” Anwar added.
Other Asian countries are not as enthusiastic. Indonesia has raised the challenge of funding such an institution, suggesting that the region work harder on local currency settlement. However, in an interview last year, Indonesia’s Economic Minister Airlangga Hartarto noted that Chinese companies investing in Asia often still use US dollars.
So while there’s a desire to reduce dollar dependence, it’s likely to persist for some time.
