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Why Is a Common Currency for BRICS Inevitable?

Tue 24 Oct 2023 ▪ 3 min of reading ▪ by Luc Jose A.
Getting informed Payment

Today, within the Eurasian Economic Union, economic transactions are settled with national currencies, which are increasingly overshadowing the dollar. Most economic exchanges involving Russia are now conducted in rubles. The euro and the dollar are undergoing displacement. This transformation in the global financial landscape cannot go unnoticed. The possibility of a common commercial currency emerging within the BRICS is back at the center of discussions. In a recent interview, Russian economist and politician Sergei Glaziev dropped a bombshell: a common BRICS currency is inevitable. Details.

De-dollarization accelerates as the idea of a common BRICS currency gains ground

BRICS: Redefining the Terms of the World Economy?

For the past few months, BRICS’ proactive stance seems to confirm predictions regarding the creation of a common currency within the bloc. In his interview, Russian economist Sergei Glaziev asserted that we are moving towards an era where the global economy will be dominated by a new currency, that of the BRICS.

He references the volatility of exchange rates, the instability and unpredictability of the current global economic system, and the economic sanctions imposed by Western powers, among other factors. According to the Russian economist, the BRICS nations collectively have the necessary material capacity to redefine the terms of global trade.

Indeed, he justifies, when it comes to creating a common currency, BRICS member countries won’t be starting from scratch. He points out that they already have an appropriate conceptual framework and a wide range of commodities.

However, Sergei Glaziev emphasizes that the BRICS currency will not replace the dollar. For him, the BRICS currency will fill the void left by the declining hegemony of the dollar. It will become the new unit of account used for settlements on a global scale.

The Threatened Dollar, the Idea of a Common BRICS Currency Gains Ground

The Technical Challenges of Realizing the Project

While it is true that a common currency would be an ambitious project for BRICS dominance, the path to its realization could be more complex than it seems. After all, the BRICS are a gathering of economies of different sizes with varying monetary policies.

Furthermore, decisions within the bloc can only be made by consensus. The recent expansion of the bloc, which has welcomed five new members, could slow down decision-making on sensitive subjects like a common currency.

Perhaps Vladimir Putin, who currently holds the BRICS presidency, has already developed a plan to address the issue. He stated during the 15th BRICS Summit that the “inevitable shift towards the dedollarization of economic ties within BRICS is accelerating.” So, wait and see!

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Luc Jose A. avatar
Luc Jose A.

Diplômé de Sciences Po Toulouse et titulaire d'une certification consultant blockchain délivrée par Alyra, j'ai rejoint l'aventure Cointribune en 2019. Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l'économie, j'ai pris l'engagement de sensibiliser et d'informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu'elle offre. Je m'efforce chaque jour de fournir une analyse objective de l'actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.