With the summit on its way, the formation of a BRICS currency very high on the agenda
The heads of state representing the BRICS nations will get together in August for a significant summit in South Africa. One of the primary topics that will be discussed at the gathering is the establishment of a single BRICS currency for the BRICS group. Experts in international finance are currently debating the specifics of the new currency, including its functionality and the timing of its introduction.
Recently, foreign ministers from the BRICS countries got together in Cape Town, South Africa, to discuss potential strategies for emancipating themselves from the dominance of the US-led global economic order. During the discussions, both broader efforts to de-dollarize trade and considerations of alternative currencies to protect the New Development Bank of the bloc from sanctions were considered.
READ MORE: BRICS Bank Expands: Egypt, UAE & Uruguay Join the Ranks
The meeting took place at the same time as a flurry of reports and studies about a possible new BRICS currency. These reports and analyses investigated the workings of the currency as well as the timeline for its emergence as a viable alternative to the US dollar. There have been a number of suggestions made, including tying the value of the currency to gold, a diversified basket of commodities, or the currencies of the BRICS nations. Nevertheless, more detailed plans have not yet been finalized as of yet.
Notably, the composition of the new BRICS currency needs to be carefully determined, taking into account the current trends in trade, the values of the respective currencies, and establishing built-in safeguards against potential financial assaults launched by the United States in an effort to devalue it. In order to address these complexities in an effective manner, time and careful consideration are required.
According to experts, the timing of the move by the BRICS countries to challenge the US-led financial order is no coincidence. The foreign and economic policies pursued by the United States and its allies have led many countries to question Washington’s credibility as a responsible global leader. This is despite the fact that these policies come with their own set of inherent risks. This sentiment is shared by countries all across Africa, Latin America, Central Asia, and the Middle East; it is not exclusive to US adversaries such as Russia and China. The ability to develop countries to tolerate unsustainable levels of debt and a global economic order that appears to favour the United States and its allies at the expense of others is becoming increasingly difficult for these countries.
READ MORE: The Benefits of BRICS: A Comprehensive Guide
As a consequence of this, these nations believe that it is necessary to rebalance the global structure and develop a model that is more sustainable. The creation and distribution of an alternative BRICS currency that can be utilized in financial dealings with parties located outside of the United States of America and its immediate allies is an essential component of this effort.
It is essential to look at the potential BRICS currency not as a direct competitor to the US dollar but rather as an alternative to the dollar. The goal of the currency is to offer an alternative that is unrelated to the current economic climate and pressures, so it avoids having a direct connection to the US dollar. It is likely that the United States will attempt to manipulate the circumstances in order to produce a connection; however, this will be actively avoided.
Regarding the architecture of the currency, it would make sense for the BRICS countries to initially restrict its use to the five core members, in addition to the eight nations seeking to join and the 17 nations expressing interest in doing so. Beginning with trade within the region would make it possible to gain a better understanding of the operational issues involved before progressively expanding its reach to a wider audience.
Given that the nations are already expanding their economies and populations, it makes sense to pursue this parallel development. Nevertheless, the procedure of establishing the new currency will require some time, and it is essential to begin its implementation as soon as possible in order to build confidence in its viability. It is possible that it will take more than a decade for the currency to reach its full potential as an alternative to the dollar. During this time, significant changes could occur within the landscape of the US dollar.
READ MORE: South Africa will establish shipping company with private sector directors
The BRICS Business Council
Dr. Iqbal Surve, a former chairman of the BRICS Business Council and a pivotal figure in the establishment of the New Development Bank (BRICS Bank), explains that the concept of a common currency was previously discussed among his coworkers at the BRICS Business Council. Dr. Surve was also a key figure in the establishment of the BRICS Bank. The common currency is not intended to compete with other currencies; instead, it is viewed as a tool that will make trade within the bloc easier and more seamless.
In a nutshell, the leaders of the BRICS nations are actively investigating the possibility of introducing a new currency in order to present a challenge to the economic order that is dominated by the United States. The particulars of the currency, including its operation and its make-up, are currently under discussion.
