BRICS: China trades trillions of yuan with 29 countries

China is seeking to support local currency swaps with 29 developing countries worth a total of 4 trillion yuan, roughly equivalent to $553.49 billion.

These bilateral currency swaps aim to increase trade and investment opportunities by creating a safety net for local currencies. Currency swaps, a common practice between central banks, allow countries to exchange their currencies, reducing exchange rate risks and maintaining flexibility in the use of the currency.

It is important to note that these swaps will not involve the US dollar, which highlights the emphasis on local currencies in all transactions. This approach ensures that central banks can engage in significant exchanges using their respective currencies, thereby encouraging active trading in local markets. China is also considering including all BRICS countries in this currency swap initiative.

According to Pan Gongshen, governor of the People's Bank of China, these currency swaps will serve as a valuable tool to provide emergency liquidity during financial crises or banking failures, benefiting both BRICS and other developing countries.

China is urging Asian countries to join this agreement, emphasizing the mutual benefits for the participating economies. A continuous exchange of currencies will help maintain the stability and liquidity of local currencies by ensuring availability in case of need.

The move to a currency swap is in line with the BRICS alliance's broader strategy to reduce dependence on the US dollar. Gongshen highlighted the importance of China's currency swaps in international efforts to ease IMF-led bailouts, further stressing their importance to global financial stability.