Banking expert and former vice-president of Banque Misr, Sahar al-Damaty said that cooperation with the BRICS will require new foundations and infrastructure to serve as a basis for evaluating currencies away from the US dollar.
It will also require developing payment systems and managing the flow of goods, energy, information and other resources such as products, services and even human resources.
A payment system must be put in place that allows current and expected countries to deal through it, she explained, in addition to the logistics of their dealings with each other.
Damaty noted that the currencies of some countries in the group are still not listed with the central banks of other countries within the BRICS.
Egypt can offer a lot
Egypt can provide a lot to the economies of the BRICS countries, she said, such as through the Suez Canal’s services in its local currencies , and through tourism, agricultural crops, and fuel exports.
Central banks and BRICS
She added that the central banks are expected to redouble their efforts to develop foundations and means of cooperation between the BRICS countries in trade exchange.
Damaty explained that, in the medium term, countries will establish partnerships for industrial development and reduce imports, which will positively influence the trade balance of Egypt and the countries of the group.
Trade between BRICS countries
In the short term, countries within the BRICS can benefit from exchange in local currencies, she said, while later on participation with the companies of these countries in areas needed by the national economy will prove vital.
Therefore, she advised that it is necessary to begin preparing for it starting now.
The group’s new development bank will also provide soft loans to become an alternative to the International Monetary Fund, she said, as the impact of the grouping will go beyond the currency only.
The optimism surrounding the BRICS has emerged due to countries suffering from high inflation as a result of the decline in the value of currencies against the dollar.
She explained that the role of the central banks is to start joining new currencies, activate payment systems and evaluate currencies.
The fall of the US dollar
Trade exchange with currencies is a short-term stage, she explained, as partnerships and increased investments are what countries tend towards.
The exchange rate of the dollar against currencies will decline, she said, and the decline of the dollar leads to a decrease in inflation resulting from the value of the dollar against currencies.
This, Damaty said, will increase the cooperation of these countries and support the movement of production, leading to an increase in the national product.
Edited translation from Al-Masry Al-Youm