The Banking Executive Magzine - July 2025 Issue

BRICS 2025 Iran, and the UAE, BRICS now rep- resents over 45% of the world’s population and a growing share of global GDP. • Structural Advantages of the Dollar: The US dollar still accounts for nearly half of global payments and remains the top reserve currency due to its liquidity, legal certainty, and institutional depth. Countries like India are cautious, preferring interoperability over out- right dollar replacement. Political and economic diversity within BRICS makes consensus difficult. Despite announcements, actual trade volumes in BRICS currencies remain low. Businesses still favour the dollar for its stability and global accept- ance. Experts suggest we may be entering a cyclical dollar bear market, not a full collapse of dollar dominance. These cycles typically last 5 to 9 years and reflect broader geopolitical and economic shifts. President Trump has threatened tar- iffs on BRICS, aligned nations, view- ing their currency efforts as a strategic threat. BRICS offers an alternative to West- ern, led institutions, attracting coun- tries frustrated by dollar, driven debt and sanctions. In short, BRICS is shaking the tree, but the dollar’s roots run deep. The real story may be less about dethron- ing the dollar and more about diver- sifying global finance. NEW EMERGING WORLD GEOPOLITICS FOLLOWING BRICS 2025 The expanded BRICS bloc in 2025 has become a powerful symbol of the shifting global order. Its rise is re- shaping geopolitics in ways that challenge traditional Western domi- nance and empower the Global South. BRICS is no longer just a counter- weight to the G7, it is a platform for strategic multi-alignment. Countries are increasingly navigating between major powers rather than aligning with one bloc. With nearly half the world’s population and growing eco- nomic clout, BRICS is positioning it- self as the voice of emerging economies, advocating for reforms in global governance. The inclusion of Iran, Egypt, and the UAE gives BRICS a stronger foothold in Middle Eastern diplomacy, espe- cially amid ongoing tensions in Gaza and Iran. President Trump has threatened 100% tariffs on BRICS nations pursu- ing de-dollarization or alternative currencies, escalating trade friction. Western institutions like the G20 and WTO face growing criticism from BRICS members, who argue for more inclusive and equitable decision- making. With expanded funding and local currency lending, the NDB is be- coming a viable alternative to the IMF and World Bank. BRICS is increasingly involved in conflict mediation, such as the “Friends for Peace” initiative on Ukraine led by China and Brazil. Nigeria’s new partner status and Ethiopia’s full membership signal BRICS’ deeper engagement with African geopolitics and resource diplomacy. Indonesia’s entry and India’s upcom- ing chairmanship reflect a nuanced approach seeking influence without alienating Western allies. In essence, BRICS 2025 is redefining the rules of global engagement. It is a forum where emerging powers ne- gotiate their place in a world no longer dominated by a single narra- tive. THE MAIN RISKS FOR ARAB BANKS Arab banks stand at a strategic cross- roads in the BRICS 2025 landscape, but with opportunity comes expo- sure. Arab banks aligned with BRICS de- dollarization efforts may face sanc- tions or tariffs, especially under the Trump administration’s aggressive stance. Inclusion of Iran and Russia in BRICS heightens the risk of politi- cal backlash or reputational damage in Western markets. Moving away from SWIFT and dol- lar, based systems could limit access to global liquidity and increase trans- action costs. Adoption of BRICS Pay or other alternatives may lead to in- teroperability issues and technical vulnerabilities. Balancing BRICS, aligned frame- works with Western compliance regimes (e.g., FATF, Basel III) may strain resources and increase audit risks. Banks dealing with sanctioned BRICS members (e.g., Iran, Russia) risk secondary sanctions or loss of correspondent banking relationships. Shifts in global trade flows and cur- rency preferences may impact asset valuations and portfolio stability. Arab banks may face limited access to Western capital markets and finan- cial services if perceived as politi- cally aligned with BRICS. Transitioning to new digital payment systems like BRICS Pay could expose banks to cyber threats and data breaches. Data governance across BRICS jurisdictions may conflict with Arab regulatory norms, causing legal uncertainty. Arab banks must tread carefully, leveraging BRICS opportunities while safeguarding against systemic shocks. A dual, track strategy that balances innovation with risk mitiga- tion will be key. the BANKING EXECUTIVE 46 ISSUE 199 JULY 2025