BRICS Nations Explore Shift From USD To Bitcoin And Gold-Backed Currency For Global Trade
It is increasingly likely that member nations will need to formulate a common currency. Historically, there have been discussions about this currency being backed by gold.
By Anna B Kiwanuka
As the BRICS August Summit approaches, member countries are debating whether or not to abandon the US dollar. Brazil, Russia, India, China, and South Africa are part of this group, and they expect a larger coalition to form, with roughly 20 other countries including 8 Arab countries and Morocco officially expressing interest in joining. The ambition to reduce Western influence, notably through de-dollarization activities, is central to their goals.
The member countries have already conducted international trade in their respective national currencies. China, for example, has used the yuan to buy the majority of its commodities from Russia. Similarly, several countries have encouraged similar local currency trades in order to reduce their reliance on the dollar. Nonetheless, discussions regarding creating a unified currency for the group continue.
This approach, however, is met with reservations, with skeptics such as seasoned economist Jim O’Neill condemning it as “ridiculous.” O’Neill concerns the possibility of forming a BRICS central bank and calls the union’s commitment into question. “Creating a BRICS central bank?” he asks. How could that possibly work? It’s almost humiliating.” O’Neill, who is currently a senior adviser at the UK-based think tank Chatham House, goes on to say that the alliance has achieved very little since its creation in 2009.
Nevertheless, it is evident that the bloc is more resolute than ever, and interest from potential new member countries is burgeoning. Recently, Saudi Arabia has expressed keenness to join the group. In response, the United States has encouraged Saudi Arabia to persist in selling oil in U.S. dollars, reflecting apprehensions about transitioning to the Chinese yuan. In a recent development, India concluded its first oil payment to the UAE utilizing its domestic currency, the Rupee. This underscores concerns that the U.S. may lose its dominant status.
This trajectory is expected to persist, although the self-interest of individual countries remains a focal point. Consequently, it appears increasingly likely that member nations will need to formulate a common currency. Historically, there have been discussions about this currency being backed by gold.
The upcoming BRICS summit, scheduled for next week, is poised to provide further insights into the composition of member states and the operational framework of the bloc. While specifics remain veiled until then, one certainty emerges: it will initiate a paradigm shift in economic power dynamics, marking the beginning of a transformation away from the dominance of the U.S. dollar in international transactions.