With the economic bloc’s annual summit set to arrive in August, the BRICS nations are collectively building toward a unified currency. Moreover, a unified currency could alter global economics as we know it.
As the nations gather together to discuss the bloc, the summit will certainly place a heavy focus on the currency’s development. Subsequently, Brazil, Russia, India, China, and South Africa are presented with a chance to truly challenge the international dominance of the US dollar.
BRICS Currency Development Continues
In recent discussions, South African Foreign Minister Naledi Pandor has discussed the idea of a BRICS currency. Specifically, she has noted that the eventual implementation of the alternative currency must come after careful discourse. Moreover, the upcoming summit has provided the perfect setting for those conversations to take place.
“It’s a matter we must discuss and discuss properly. I don’t think we should always assume the idea will work, because economics is very difficult, and you have to have regard for all countries,” Pandor stated.
Pandor has been careful to diminish some expectations regarding the alternative currency. Specifically, to ensure that its development does not instantly create a replacement for the US dollar. However, the BRICS nations are still collectively building toward a unified currency, and that has a lot of potential.
These efforts have challenged the international prominence of the US dollar, following months of de-dollarization efforts. Additionally, the fruition of this currency could create a new global economic order. Even if the world does not automatically embrace the alternative currency, its place as a viable alternative in use by several countries will shatter the current status quo.
Conversely, the idea of a BRICS currency will come with its challenges. Specifically, it will face 80% of international transactions that take place with the US dollar. Moreover, it will face off against the two-thirds of global reserves held in the greenback. However, these ideas will maintain a potential weakness.
Western sanctions placed on Russia have forced the BRICS nations to become self-reliant. No longer able to use the dollar, they have embraced trade in national currencies. Subsequently, these trading nations have already existed in a world where the dollar has lost relevance. Thus, the weaponization of the dollar has only served to set the table for a BRICS currency.
The Potential for Expansion
The ascension of bilateral trade in the bloc and macroeconomic factors could continue to diminish the dollar. Thus, propelling the BRICS nations to enhance use cases for their alternative currencies. Now, it will only grow more threatening as plans for expansion begin to abound within the bloc.
In addition to BRICS currency discussions, the concept of expansion will undoubtedly dominate the summit. Specifically, more than 20 nations have already submitted their bids for membership. For these countries to enter, and engage in preliminary trade settlements in their national currencies, the threat to the US dollar grows. Ultimately, setting up the developing BRICS currency to complete its shift in global economics.
The timing of expansion, and the currencies development, as potentially limited some of the concerns regarding its arrival. Pandor is certainly correct about the challenges present in an alternative currency. However, tiresome with the power of the West has fueled nations to embrace change.
Thus, delivering. potential perfect time for the globe to begin a slow shift. Not to replace the dollar, but to welcome an alternative trade currency with a select few nations.