As the upcoming BRICS leaders’ summit approaches, the topic of a common currency is not on the agenda for discussion, according to South Africa’s diplomat in charge of BRICS relations, Anil Sooklal. South Africa, the current chair of the group, will be hosting the summit in Johannesburg from August 22 to 24. Instead, the nations, which include Brazil, Russia, India, China, and South Africa, will explore ways to use their national currencies and reduce reliance on the U.S. dollar.
BRICS leaders summit to hold on August
Sooklal clarified that there have been no talks about a unified BRICS currency and that the group’s focus is on deepening trading and settlement in local currencies. Despite recent reports claiming that the nations would announce a gold-backed common currency at the summit, Leslie Maasdorp, the vice president and chief financial officer of the New Development Bank, emphasized that there are no immediate plans to launch a currency to compete with the U.S. dollar.
He noted that any alternatives would be a medium to long-term ambition. The idea of a common currency within the BRICS bloc has been championed by Brazil’s President Luiz Inacio Lula da Silva and Russian Foreign Minister Sergei Lavrov. Their support for such a currency stems from the BRICS nations’ efforts to counter Western dominance in global finance, especially following the financial sanctions imposed on Russia by the West after it invades Ukraine.
These sanctions led to the freezing of about $300 billion in Russian central bank assets, prompting various countries to seek alternatives to the U.S. dollar. While de-dollarization efforts are underway within the BRICS group, Sooklal highlighted that the process has been expedited due to the conflict and unilateral sanctions. He asserted that the days of a dollar-centric world are over, as a multipolar global trading system is now a reality.
The countries will focus on strengthening their currencies against the dollar
India’s foreign minister also emphasized that national currencies would remain a significant aspect of each country’s monetary policies for the foreseeable future. Similarly, Russia’s central bank governor shared the sentiment, pointing out that implementing a BRICS currency would require the consent of multiple parties due to various challenges. Sooklal disclosed that more than 40 countries have expressed interest in joining the BRICS bloc, with 22 of them already having submitted formal applications.
He believes that the BRICS group could expand to include over 50 countries in the future. Creating a common currency among the BRICS nations is not a simple task, as it would necessitate the establishment of a banking union, fiscal union, and macroeconomic convergence. These elements are essential to ensure the smooth functioning and stability of a unified currency.
As the BRICS leaders gather for their summit, the focus remains on finding avenues to strengthen their economies and reduce their reliance on the U.S. dollar. While the prospect of a common currency might be on the agenda in the long run, it currently takes a back seat to the broader de-dollarization efforts. With the global financial landscape continuously evolving, the BRICS nations are navigating these changes strategically to assert their economic influence and promote greater financial independence.
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