BRICS states have announced that they are working towards a new currency.
A senior Russian official indicated that a new currency project might be announced at the upcoming BRICS summit in South Africa, August 2023. The alliance’s other members – Brazi, China, Russia, and India – have already taken steps to bypass the US – dominated global trade and finance system.
While further details of this landmark project are yet to be fully revealed, it is already clear that its scope will be significant.
The current BRICS countries already account for 40% of the global population and one – fourth of the global GDP. The alliance is also set to expand with Iran and Saudi Arabia having initiated the formal process to join.
The BRICS currency would be based on a strategy that does not defend the dollar or euro and will be pegged to the value of not just gold but also other groups of products, like minerals.
The first part of this process, namely trade in national currencies, is already well underway. Last year, China and Brazil – the world’s second largest economy and Latin America’s biggest economy, respectively – announced that they will conduct bilateral trade in their local currencies, the Chinese Yuan and the Brazilian reais, bypassing the US dollar.
China is Brazil’s biggest trade partner, with bilateral trade reaching USD $ 150 billion in 2022. China’s currency, the Renminbi (RMB), has also become Brazil’s second – largest international reserve currency.
Not only is the BRICS bloc seeking to move away from dollarization in matters of trade and finance, it has also attempted to provide an alternative to the US – dominated institution, the International Monetary Fund (IMF) and the word Bank, in the form creating the New Development Bank (NDB), the BRICS bank.
Economist Dawie Roodt , gives his take on why many countries are seeking to join BRICS.
