Analysts have started to discuss the possibility of launching a future BRICS currency to circumvent U.S. sanctions and the dollar’s pervasive presence in the global economy. After WWII, the U.S. dollar’s rise to prominence was instrumental in spurring an era of economic growth, but its weaponization has prompted other countries to consider other options for international trade.
Examining the Possibility of a BRICS Common Currency
Zhou Weidi, deputy director of the Institute of Economics and Business Administration Central China Pedagogical University, has explored the potential implementation of a BRICS currency as a way to fight unilateral sanctions and the overwhelming power of the U.S. dollar on the international stage.
Zhou noted that the weaponization of the U.S. dollar has raised doubts about its future, even among American circles, leading many countries to search for alternatives. He added that while the use of the USD offered certain advantages after WWII, the world has since evolved and the advantages of the dollar for international settlements have diminished.
Nevertheless, Zhou made it clear that the introduction of a BRICS currency bloc, which would include Brazil, Russia, India, China, and South Africa, will not be a quick process and that the creation of such a currency could take years. He concluded:
This does not mean that the dollar will suddenly collapse, but we need to address the issue of de-dollarization.
“If, for example, such a regional currency appears by the middle of this century, I think it will stimulate the development of both those countries and the whole world,” Zhou said.
Although the BRICS currency is still in its early stages, Russia, one of the biggest economies in the bloc, has already begun to use the Chinese yuan for bilateral settlements to avoid U.S. sanctions. Qiang Xiaoyun, the director of the Center of Russian-Central Asian Studies at the Shanghai Institute for International Studies, commented on the matter and said:
Using the yuan or the ruble in payments is the most promising way to move away from the Western payment system.
Evaluating the Possibility of Issuing a Common Currency
The possibility of issuing a common currency for transactions among the countries of the BRICS bloc was first raised last year, when Russian President Vladimir Putin stated that the initiative was being considered during a BRICS summit held in China, in order to tackle U.S. hegemony.
More recently, State Duma Deputy Chairman Alexander Babakov, declared that the issue of a BRICS common currency will be discussed during the next BRICS summit, which will be held in Durban, South Africa in August, and that new countries could join the bloc.
What do you think about the implementation of a BRICS currency as an alternative to the U.S. dollar? Let us know in the comment section below.
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