The much-anticipated shared currency of the BRICS nations won’t be a topic for discussion at the forthcoming leaders’ summit of the economic coalition, as confirmed by South Africa’s diplomatic representative overseeing BRICS affairs. The diplomat clarified that the emphasis during the summit would instead be on de-dollarization, aiming to encourage the use of local currencies in international commerce rather than the U.S. dollar.
BRICS Aim to Lower Dependence on Dollar
The conversation around the introduction of a unified BRICS currency will not feature in the leaders’ summit of the economic alliance, affirmed Anil Sooklal, the South African diplomat managing BRICS relations.
As the current BRICS group chair, South Africa will host the summit in Johannesburg from August 22-24. Sooklal explained that the BRICS countries (Brazil, Russia, India, China, and South Africa) plan to debate the utilization of national currencies and reducing dependency on the U.S. dollar. As quoted by Reuters, he stated:
The idea of a BRICS currency has never been a point of discussion; it’s not in our plans… We have, however, emphasized and continue to fortify trading in local currencies and settling in local currencies.
Contrary to a recent assertion by the Russian news outlet RT that the BRICS nations will reveal a common gold-backed currency at the August summit, Leslie Maasdorp, Vice President and CFO of the New Development Bank, also known as the BRICS Bank, mentioned that there are no imminent plans to introduce a currency to rival the U.S. dollar within the economic alliance. He differentiated between de-dollarization efforts and the creation of a shared BRICS currency, emphasizing, “The development of an alternative indeed is a mid to long-term ambition.”
The idea of a shared currency has been promoted by Brazil’s President Luiz Inacio Lula da Silva and Russian Foreign Minister Sergei Lavrov as a measure to counter Western financial hegemony. This comes after significant financial sanctions were imposed on Russia by the West following its invasion of Ukraine. These sanctions have resulted in approximately $300 billion in Russian central bank assets being frozen, prompting a quest for alternatives to the USD.
With respect to de-dollarization, Sooklal elucidated:
The BRICS initiative, which has been fast-tracked due to the ongoing conflict and resulting unilateral sanctions… The days of a dollar-centric world are behind us, that’s a fact. Today, we operate in a multipolar global trading system.
Earlier in the month, India’s foreign minister underscored that the issue of currencies would continue to be a “national matter for a considerable period.” The governor of Russia’s central bank echoed similar views, stating that the creation of a BRICS currency would require consensus among multiple parties due to the challenges involved in its implementation. Furthermore, the governor of South Africa’s central bank underlined that the introduction of a shared currency would necessitate the formation of a banking union, a fiscal union, and macroeconomic convergence.
Sooklal also disclosed that over 40 countries have expressed interest in joining the BRICS coalition, with 22 having already formally applied. He expressed optimism that the BRICS group could potentially grow to include over 50 nations.
Frequently Asked Questions (FAQs) about BRICS De-dollarization
Will a common BRICS currency be discussed in the upcoming leaders’ summit?
Are there immediate plans to introduce a BRICS currency to rival the U.S. dollar?
Leslie Maasdorp, Vice President and CFO of the New Development Bank, also known as the BRICS Bank, stated that there are no immediate plans to introduce a currency to compete with the U.S. dollar.
What measures are the BRICS nations taking to counter Western dominance in global finance?
BRICS nations are focusing on de-dollarization, aiming to use national currencies in international commerce, rather than the U.S. dollar. This initiative has gained momentum due to the financial sanctions placed on Russia by the West.
Are there any countries interested in joining the BRICS coalition?
Yes, more than 40 countries have shown interest in joining the BRICS coalition, and 22 of them have already submitted formal applications.
What are the requirements for introducing a common BRICS currency?
Introducing a common BRICS currency would require the formation of a banking union, a fiscal union, and macroeconomic convergence. It would also necessitate consensus among multiple parties due to the implementation challenges involved.
More about BRICS De-dollarization
- BRICS Nations
- BRICS Bank
- Russian Sanctions
- International Trade
- Macroeconomic Convergence