With rampant discussion of a BRICS gold-backed currency, one market analyst has shared why they believe the idea would fail. Indeed, former Bank of America analyst, David Woo, did not hold back his thoughts on the proposed idea of a gold-backed BRICS currency to combat the US dollar.
In a video posted to Woo’s YouTube channel, he noted that the idea “makes no sense whatsoever.” Moreover, he discussed the creation of such a currency as the formulation of just another gold derivative.” Ultimately, calling a gold-backed currency “purely symbolic” with a fate likely assured in failure.
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Former Bank of America Analyst Questions BRICS gold-Backed Currency
In the lead-up to last month’s BRICS 2023 summit, talk of an alternative currency abounded. The bloc had long embraced de-dollarization, with many viewing a new trade currency as a step toward that goal. Yet, some have spoken against the idea, combating its logic. Including a former Bank of America analyst.
Speaking in a recently uploaded YouTube video, David Woo assured that a BRICS gold-backed currency would likely fail. Subsequently, discussing the rather unnecessary realization of it. Ultimately, breaking down why the creation of an alternative, backed by gold, would be a fruitless task.
“In any event, we have to ask what exactly the BRICS would accomplish by creating what would be essentially just another gold derivative?” Woo stated. “If you think having more gold backing a currency makes it stronger, then the more gold China allocates to the BRICS currency means there is less gold backing the RMB, which, if we follow this logic, means a weaker RMB.”
“The bottom line: the BRICS can create a currency backed by gold, but its purpose would be purely symbolic,” he added. The idea of creating an alternative currency stemmed from a desire to lessen US dollar dependence. Yet, the promotion of local currency use appears to be the best path forward toward that goal.