The China-led BRICS grouping has been trying to end their dependence on the US dollar for some time now.

The main issues standing in their way, however, is that the BRICS, which now includes Saudi Arabia, Egypt, Ethiopia, Iran and the United Arab Emirates all have relatively weak, non-convertible currencies ( not accepted for most international trade) and most of which have steadily lost value against the dollar over the past five years.

This makes it difficult to price international trade in these currencies because of currency value fluctuation.

The Saudi and UAE currencies have maintained their value against the dollar, but this is because they are pegged to the dollar and backed by dollars.

This means that neither could displace the dollar as the global trade currency since both derive their value from the dollar.

The only international currency in the grouping is the Chinese yuan which is also partially pegged to the dollar and suffers from the same problems of non-convertibility and weak exchange rate to the USD.

Additionally, none of the central banks of BRICS countries are willing to hold large amounts of BRICS currencies as reserves and they are largely useless for international trade with other countries.

To solve this problem, BRICS has decided to implement a currency swap arrangement.

A currency swap is a financial agreement between two countries to exchange a set amount of one currency for an equivalent amount of another currency, based on a pre-determined exchange rate.