The former Prime Minister of Russia Sergey Stepashin who briefly served in 1999 opened up about the prospects of a BRICS currency. He commended the de-dollarization initiative in a historical move from the alliance to cut ties with the US dollar. The initiative is briefly successful as both China and Russia have settled trade in local currencies with a handful of developing countries. Even India initiated oil deals with its BRICS counterparts Russia and the UAE paying native currencies for settlements.
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There have been reports of the BRICS alliance planning to launch a new currency to take on the US dollar. If the currency is launched and gains the trust of developing countries, the US dollar will be in jeopardy. Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade.
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BRICS Currency: Russia Makes Major Announcement
On the heels of the reports of a BRICS currency, former Russian PM Stepashin explained that the alliance must first work on settling cross-border transactions in local currencies. He stressed that a BRICS currency could be hard to implement as India and China have larger economies. The implementation would be harder than imagined and could lead to disasters in the bloc, he said.
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The best solution to overcome the issue is to start settling trade in local currencies and not the US dollar, Stepashin explained. “The first step we should follow is to make payments in national currencies. It is necessary to ensure smooth operation of the Eurasian Bank and the BRICS Bank and execute transactions there,” he said.
He emphasized that “It is difficult to imagine that India and China have a common currency. These are too large countries, large economies,” he said. Therefore, a new BRICS currency is not suitable at the moment while national currencies should take the lead, he summed up.