to create a Global Development Bank that issues credits and grants in their local

currencies (an institution similar to the World Bank or IMF). Another proposition was

the creation of a BRICS currency, considered as a less viable option by some

economists (e.g., Lo and Hiscock (2014)). The main reasons are that BRICS do not

fulfil the basic requirements for an optimum currency area (OCA) due to the

members’ geographical dispersion, and lower BRICS intra-trade 8.81% compared to

trade with the US (13.70%), EU (16.24%), and the Rest of the World (-ROW-

55.39%) in 2012. This still obligates them to use the USD and EUR for most of their

transactions. Most likely, they would use their local currencies in bilateral trade. As a

matter of fact, in 2010 China and Russia agreed to trade using their own currencies.

On March 26, 2013 at the fifth BRICS summit in Durban, South Africa, China and

Brazil have signed an agreement to trade up to $30 billion per year in their own

currencies representing about 40% of the total trade between the two countries in

2012. In addition, in June 2012 China and Japan launched direct trading of Chinese

Yuan (CNY)-Japanese Yen (JPY). With all the swap arrangements and currency deals

that China is undertaking, it will accelerate the internationalization of the CNY. If the

BRICS were to choose a different currency for intra-trade, as a means to reduce the

USD dependence, the size of the Chinese economy and its trade volume make the

Yuan the most likely candidate. For the BRICs countries there are several reasons to

move away from the use of the USD. First, it would allow BRICS to diversify their

foreign reserves as a way of managing risk. Second, if the BRICS use their national

currencies to trade and they experience a bright future as predicted, their currencies

may become global. Third, it is believed that the use of BRICS currencies would