There has been persistent discussions about a new BRICS currency. This should be of interest to us since as an oil producer, we will have large currency reserves going forward. Below is an appraisal adapted from a NASDAQ writer.
“The BRICS nations have a slew of reasons for wanting to set up a new currency. Recent global financial challenges and aggressive US foreign policies have prompted the BRICS countries to explore the possibility. They want to better serve their own economic interests while reducing global dependence on the US dollar and the euro.
When will a BRICS currency be released? There’s no definitive launch date as of yet, but the countries’ leaders have discussed the possibility at length. During the BRICS Summit, held in mid-2022, Russian President Vladimir Putin said the BRICS countries plan to issue a “new global reserve currency,” and are ready to work openly with all fair trade partners.
In April 2023, Brazilian President Lula da Silva showed support for a BRICS currency, commenting, “Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries? Who decided that the dollar was the (trade) currency after the end of gold parity?”
In the lead up to the 2023 BRICS Summit last August, there was speculation that an announcement of such a currency could be on the table. This proved to be wishful thinking, however. “The development of anything alternative is more a medium to long term ambition. There is no suggestion right now to create a BRICS currency,” Leslie Maasdorp, CFO of the New Development Bank. at the time. The bank represents the BRICS bloc.
At the 2023 BRICS Summit, six countries were invited to become BRICS members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. All but Argentina officially joined the alliance in January 2024. At the 2024 BRICS Summit,13 nations signed on as BRICS partner countries (not yet full-fledged members): Algeria, Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Vietnam and Uzbekistan.
In recent years, the US has placed numerous sanctions on Russia and Iran. The two countries are working together to bring about a BRICS currency that would negate the economic impacts of such restrictions, according to Iranian Ambassador to Russia Kazem Jalal, speaking at a press conference during the Russia–Islamic World: KazanForum in May 2024.
Some experts believe that a BRICS currency is a flawed idea, as it would unite countries with very different economies. There are also concerns that non-Chinese members might increase their dependence on China’s yuan instead. That said, when Russia demanded in October 2023 that India pay for oil in yuan as Russia is struggling to use its excess supply of rupees. However, India refused to use anything other than the US dollar or rupees to pay.
A new currency could have several benefits for the BRICS countries, including more efficient cross-border transactions and increased financial inclusion. By leveraging blockchain technology, digital currencies and smart contracts, the currency could revolutionize the global financial system. Thanks to seamless cross-border payments, it could also promote trade and economic integration among the BRICS nations and beyond.
A new BRICS currency would also: Strengthen economic integration within the BRICS countries; Reduce the influence of the US on the global stage; Weaken the standing of the US dollar as a global reserve currency; Encourage other countries to form alliances to develop regional currencies; Mitigate risks associated with global volatility due to unilateral measures and the diminution of dollar dependence and weaken the power of US sanctions, leading to a further decline in the dollar’s value.
Last December, Trump posted a direct threat to BRICS nations : “We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US dollar or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US economy.”
Guyana should take note.
