Interview: Ba Zhong Local Currency Settlement Promotes a Fairer International Financial Order Reporter | Director | Ba Zhong
Brasilia, August 19th (Xinhua) - Exclusive interview: Local currency settlement between Brazil and China promotes a fairer international financial order - Interview with Pires, Director of the Institute of Economics and International Studies at S ã o Paulo State University in Brazil
Xinhua News Agency reporter Bian Zhuodan
Marcos Pires, director of the Institute of Economics and International Studies at S ã o Paulo State University in Brazil, recently stated in an interview with Xinhua News Agency that settling trade between Brazil and China in local currency is an "important step towards establishing a more equitable international financial order.".
In the first half of this year, China and Brazil signed a memorandum of cooperation to establish RMB settlement arrangements in Brazil, and Brazil announced that it will use its own currency for bilateral trade settlement with China.
Pires said that settling directly in local currency is beneficial for reducing transaction costs. "From a financial perspective, using local currency settlement can also create a large amount of real and RMB capital, promoting direct investment."
"Adopting local currency settlement will encourage Brazilian companies to actively participate in the Chinese industrial chain, especially in the fields of electric vehicles, clean energy, biotechnology, and precision agriculture." Pires said that the two countries also have a lot of cooperation space in social governance, such as in the field of smart city construction that covers many affairs such as safety, health, health, and public management.
Pires believes that although local currency settlement agreements will not immediately have a huge impact, in the long run, as China's position as the world's largest trading partner is consolidated, the influence of local currency settlement agreements will become increasingly profound. With more and more developing countries signing local currency settlement agreements with China, the global trade and investment situation will inevitably undergo significant changes.
After the outbreak of the Ukraine crisis, the United States and the West implemented many financial sanctions against Russia, including excluding Russian banks from the Global Interbank Financial Communications Association system. Pires said that the position of the US led Global Interbank Financial Communications Association system is declining, "especially when this system is used as a weapon of sanctions by the US and its allies.".
Pires believes that the RMB cross-border payment system is a very important innovation that will help democratize international mechanisms, thereby ensuring that the open international economy is not constrained by the interests of specific countries themselves.