The BRICS bloc has reportedly chosen gold to power its developing payment system, further challenging the US dollar’s supremacy. Throughout the last several years, the economic bloc has stocked up on the metal. Now, it looks as though it is set to rely heavily as they turn away from the greenback.
Over the last year, the BRICS bloc has firmly embraced a consistent de-dollarization approach. Through its growth, it has sought to lessen international reliance on the West. As it looks for a larger role in global economics, it could be set to introduce a new currency that rivals the US dollar’s dominance in the modern world.
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BRICS Leans on Gold as it Takes on the US Dollar
The BRICS bloc is set to debut a game-changing development at its upcoming 2024 summit. There are talks that it will launch its blockchain-based payment system. Yet, there is also talk that a native trade currency could also be set to make its debut at the event.
Either way, the BRICS bloc has chosen gold to power its developing payment system as it looks to challenge the US dollar. A new report shows that the metal will be a critical aspect of the payment platform, making up 40% of a common unit of account. The other 60% would be made up of various BRICS currencies.
BRICS Business Council task force on Financial Services head, Audrey Mikhailishin, recently discussed the integration. They noted gold as a “convenient and universal instrument.” Moreover, they discussed how the metal could be crucial in helping the project develop.
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“When you have a unit of account that can be converted into any national currency, it is more convenient for you to hold it, since it is a more liquid instrument.” That will be critical as the bloc looks to increase competition with the US dollar.
Since the Bretton Woods agreement in 1944, the dollar has dominated finance. Yet, it replaced gold. There is no national currency with the cache to challenge the dollar. However, there are enough countries leaning on gold to create increased competition.
The metal has also thrived in 2024, reaching several all-time highs. That is counter to the US dollar’s fading relevancy. According to the Atlantic Council’s Dollar Dominance Meter, the greenback has lost 14% of its global reserve share. That has been on the decline since 2002. a BRICS currency should only fast-track that.