The BRICS alliance is open to the idea of launching a common currency to challenge the U.S. dollar. BRICS is looking to dethrone the U.S. dollar from its global reserve status and put local currencies in charge. The idea gained momentum after the U.S. pressed sanctions on Russia making developing countries band together to protect their economies.
BRICS confirmed that uprooting the U.S. dollar as the global currency is a long-term goal and will take many chances to reach their desired target. Read here to know how many sectors in the U.S. will be affected if BRICS stops using the dollar.
So if BRICS launch their common currency someday, will it have the potential to dethrone the U.S. dollar? In this article, we will highlight what financial experts think could happen if BRICS releases a new currency.
Will BRICS Currency Uproot the U.S. Dollar? Experts Weigh-In
BRICS is accumulating massive amounts of gold and reports suggest they could back their common currency with the precious metal. Read here to know how many tonnes of gold BRICS purchased in 2023 alone. The alliance is now the biggest buyer of gold this year adding stockpiles of the precious metal to their Central Banks.
Considering the option of backing their currency with gold, Danny Bradlow, professor at the Centre for Advancement of Scholarship at the University of Pretoria, said that the idea of going back to the gold standard is outdated and no longer holds water in modern economics. “None of them have shown to be particularly useful in international trade,” Bradlow told Al Jazeera.
Another financial expert remains skeptical about the creation of a separate and common BRICS currency. “Creating the BRICS currency will require a set of institutions,” Yu said. “Institutional creation requires a common set of standards and underpinning values. These are very difficult to achieve, although not impossible.”
Launching a new currency in the markets requires lots of work and changes in dynamics in the financial sector. In conclusion, let alone BRICS dethroning the U.S. dollar, the alliance will find it hard to launch a new currency in the foreign markets. The cooperation between the countries to launch a new currency needs robust attention which is lacking at the moment.