This Thursday, in Shanghai, Brazilian President Luiz Inácio Lula da Silva attacked the dominance of the US dollar as the world’s reserve currency and called for the use of other currencies in the trade relationship between Brazil and China.
“I wonder every day why countries are forced to do their trade in dollars,” said the Brazilian head of state, at the headquarters of the New Development Bank, created by the BRICS, the bloc of emerging economies that brings together Brazil. , Russia , India, China and South Africa.
“Who decided that the dollar was the reserve currency after gold disappeared as a currency?” he questioned. “We need to have a currency that gives countries a bit more peace of mind,” she added.
China has been trying to internationalize its currency, the yuan, since 2009, with the aim of reducing reliance on the dollar in trade and investment deals and challenging the role of the US currency as the world’s main reserve currency.
This issue became more urgent in a period of geopolitical friction, which resulted in the fragmentation of production chains, aimed at weakening the central role of China, and in the sanctions against Moscow, after the invasion of Ukraine.
The dollar is used in 84.3% of trade worldwide, according to recent data published by the British newspaper Financial Times. But the yuan’s share has more than doubled since the invasion of Ukraine, from less than 2% to 4.5%, reflecting the increased use of the Chinese currency in trade with Russia.
The financing difficulties of the poorest nations, which are already facing a sovereign debt crisis, after the Covid-19 pandemic, have worsened in recent months due to the rise in interest rates in the United States, which aims to combat the runaway inflation.
Brazil has been hit particularly hard: the South American country’s central bank last month kept the base interest rate at 13.75% a year, the highest level since December 2016.
Lula da Silva questioned why “a country has to chase the dollar in order to export.”
“If the Chinese know how to have one thing, it’s patience,” said the Brazilian president. “If you need to be a little patient, you have to do it, but a bank like the BRICS can create a currency capable of financing the trade relationship between Brazil and China and between Brazil and the other BRICS countries,” he added.
The Brazilian president also defended the importance of creating new multilateral financial institutions and reforming the existing ones, with a view to generating better conditions to respond to the needs of developing countries.
“The International Monetary Fund (IMF), or any other bank, when it lends money to a third world country, feels entitled to command, to manage the country’s account, to visit the country to see its accounts,” Lula observed. da Silva.
“No ruler can work with a knife to his throat,” he said. “Banks have to be patient and, if necessary, renew the agreements and put the word ‘tolerance’ on each renewal.”
The Brazilian head of state regretted that we are in the 21st century as we were at the beginning of the 20th century, “with the rich getting richer and the poor getting poorer.”
“All countries can borrow as long as that country has contracted the debt for the construction of a work that creates a new asset that brings a better future to that country, more investment capacity, more production capacity, more export capacity,” he shot. .
“This is the world we have to see. This is the world we have to live in,” he added. “Not this dark world of people who look like geniuses and when it collapses, like Lehman Brothers collapsed, [na crise financeira global]in 2008, the one who has to pay the bills is the State”.
Source: TSF
