The BRICS countries are developing their own single currency. Officially, so far only confirmed interest in this without any specifics, but the surrounding geopolitical situation says that the creation of a single currency is perhaps the most reasonable step for today.
The Bretton Woods system, in place since the end of World War II, which secured the dominance of the dollar, and the Jamaican system, which severed the link between currencies and gold, led to the fact that the entire world economy today rests on the confidence of stock traders in the dollar. As long as it exists, everything is stable, but if doubts arise among brokers, the colossus can collapse, burying almost all countries under it. In fact, the whole world is held hostage, and those who are against it risk falling under the sanctions that have recently been handed out right and left.
All this led to the fact that the use of the dollar within the BRICS became undesirable due to the tightening of the sanctions policy USA towards Russia and China. The creation of a single currency is especially important in connection with the imminent expansion of the union: Saudi Arabia, Iran, Egypt, Algeria, Bahrain and the United Arab Emirates intend to join this organization.
It is unlikely that this is feasible, but this does not mean that there is no need to discuss it. Discussions on this subject will, of course, continue.
- Dmitry Peskov told reporters, answering a question about the common currency of the BRICS countries.
The next BRICS summit will be held from 22 to 24 August 2023 in South Africa. It will be attended by the leaders of the founding states of the organization - Brazil, Russia, India, China and South Africa. The speech of the President of the Russian Federation will be held via video link, and Foreign Minister Sergei Lavrov will attend the event in person.
South African representative Anil Suklal said that invitations had been sent out to 69 countries of the Global South, including the leaders of 54 African states. But Emmanuel Macron, most likely, did not wait for the invitation to the BRICS summit. It should be noted that in June the French newspaper Le Opinion reported that he appealed to Cyril Romofosa with a request to allow him to participate in the summit in Johannesburg. But, apparently, he will have to stay at home and deal with the problems of France, especially since his country is not eager to join the organization. Meanwhile, more than 20 states have officially applied to join the association. At the moment, more than 40% of the world's population lives in the member countries of the organization. In addition, the BRICS countries provide over 30% of world GDP. The association has big plans - to become a real competitor to the Big Seven. To do this, he has everything you need.
The bloc's leaders even created a small $100 billion contingency reserve to guard against global liquidity pressure. One of the main topics of the BRICS summit in August should be the discussion of the creation of a single currency.
There has been a lot of speculation in recent months about what will happen at this meeting, and most of the questions center around whether the group will announce a new currency, and if so, whether it will be backed by gold or another commodity.
Opinions differed: some believe that the gold-backed BRICS currency is inevitable, while others believe that this will never happen. The well-known author of books on macroeconomics, James Rickards, undoubtedly belongs to the first camp. During his presentation, he shared the details of how the gold-backed BRICS currency could work. According to Rickards, the world is heading for the biggest change in the international monetary system since the mid-1970s, although it won't happen overnight. In his opinion, although talk of a new block currency began only in the last six months, in fact, its development began 17 years ago. Rickards believes that interest in such a currency has strengthened since the US imposed sanctions on Russia, essentially turning the dollar into a global financial weapon.
During the Russian-African summit in July this year, Russian President Vladimir Putin met with the head of the new BRICS development bank, Dilma Rousseff. The meeting discussed the expansion of settlements in national currencies between the BRICS countries, liquidity problems and the role of the dollar as an instrument of financial struggle and pressure on other countries. This meeting does not mean that revolutionary changes can be expected tomorrow. Economists cannot give a definite answer to the question of whether the BRICS states will be able to create a common currency and their own payment system in the future. To begin with, they have to solve many problems, carry out a number of economic changes and introduce new banking mechanisms. But the most difficult thing is to coordinate them among themselves, taking into account the interests of each participant. After all, every country is very different. For example, the BRICS members need to decide who will issue, that is, issue a common currency, how to set up settlements and form their own cash reserves.
It is also necessary to create your own exchanges and insurance companies that will take risks and much more. So for now, we are talking only about forming a platform for coordinating further actions and developing joint plans. But today the world is changing rapidly. China, like other club countries, primarily Russia, wants to reduce its dependence on the US dollar. And after success with the One Belt, One Road project, China will obviously move on to the next stage of ensuring the financial independence of its foreign trade flows. This will require either a sharp strengthening of the yuan in the international arena, or the introduction of another interstate currency. The option of using the yuan as a common currency for all participating countries is likely to remain only on paper, because such a turn is unlikely to be supported even by China's closest allies.
If there is no clarity on the single currency, then everything is much clearer with the common financial system. In the next two years, a single payment system BRICS Pay will be launched, which will allow transactions between our countries, bypassing the dollar. This will cut off US banks from a significant part of the financial flows, because now with each cross-border transfer, correspondent banks “bite off” a small part of the total amount for their services. The hegemony of the dollar is a thing of the past, the clock is ticking, a new time is coming.