The BRICS group seeks to put forward a new unified currency, in order to use it in trade exchanges between its countries instead of the dollar. This step aims to eliminate the dominance of the American currency in global trade, especially at a time when it has become a tool of economic punishment against some countries of the group.
Talk has returned about a new unified currency that the BRICS countries intend to launch, in order to adopt it in trade exchanges between those countries, and between them and the world, in order to compete with the US dollar, which dominates as a reference currency for most of global trade, in order to eliminate that hegemony.
Talk about a unified currency for the "BRICS" is not a new issue. Rather, it was raised years ago, but it has gained great urgency recently, especially after the war in Ukraine, as the dollar became a punitive tool against the Russian economy, which prompted it to search for new alternatives to its foreign trade. Primarily oil and grain.
The new BRICS currency
According to a report by the Russian agency "Sputnik", the "BRICS" countries (Russia, China, India, South Africa and Brazil) are in the process of establishing a new means for their internal and external trade payments in the form of a single currency. This was confirmed, according to the agency, by Deputy Speaker of the Russian State Duma Alexander Babakov, during his speech on the sidelines of the Indo-Russian Business Forum in New Delhi in early April.
Babakov said that this new currency will be established on a strategic basis, not based on the dollar or the euro, and that its insurance will be based on gold and other commodities such as rare metals. He stressed that the plan to launch this currency will be presented at the BRICS leaders summit this year.
This step comes after previous statements by Russian Foreign Minister Sergey Lavrov, last January, in which he said that the initiative to create a unified currency among member states would be discussed during the summit to be held in South Africa, next August.
"This is the direction in which the initiatives, which appeared ... just a few days ago, are going, regarding the need to think about creating special currencies within the BRICS group of countries, and within the community of Latin American and Caribbean countries," Lavrov said. He added, "This will certainly be on the agenda of the BRICS summit, which will be held in the Republic of South Africa at the end of August, where a group of African countries have been invited."
The BRICS group seeks through these measures to eliminate the softness of the dollar on global trade exchanges. In this regard, at the end of last March, Brazil and China signed an agreement to abandon the US dollar in their bilateral transactions, which is expected to reduce investment costs and lead to the development of economic relations between the two countries.
How does "BRICS" seek to topple the dollar?
Calls to abandon the dollar within the BRICS group became more urgent after the outbreak of the war in Ukraine, as the US currency became one of the Western punitive tools against the Russian economy.
This reality also prompted the countries of the Economic Community to intensify cooperation between them, which is confirmed by the South African delegate to BRICS, Anil Soklal, by saying: “The United Nations did not impose sanctions on Russia, but only unilateral (Western) sanctions, so our relationship with Russia is stronger than Ever".
The BRICS bloc represents a global economic power, seeking to be the second main pole in the global economy, due to its large population, richness in terms of natural resources and its industrial power.
The population of "BRICS" is more than 3 billion and 200 million people, or nearly 42% of the total world population. While the nominal GDP of these countries in 2018 amounted to about 19.6 trillion dollars, or about 23.3% of the total global output. And in 2020, despite the health crisis, its crude output amounted to $18.6 trillion, according to the International Monetary Fund.
According to the World Trade Organization, in 2020 the BRICS countries exported $3.3 trillion worth of commodities, $2.6 trillion of which were exported by China alone. The group exports the equivalent of 16% of the total global exports, and imports 17% of the total imports in the world.
Since its inception, the BRICS economies have witnessed steady growth, and analysts predict that they will reach a growth rate of 40% by 2025.
According to these numbers, analysts believe that the "BRICS" group has the economic, demographic and natural qualifications to remove the dollar's hegemony from the throne of international trade, on which it sat after the Second World War.
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