BRICS Leaders to Discuss Common Currency at Upcoming Summit

BRICS Leaders to Discuss Common Currency at Upcoming Summit

The BRICS leaders are keen to discuss a common currency at the upcoming leaders’ summit in August in Johannesburg, South Africa. "It’s a matter we must discuss properly," said the South African minister, noting that several countries are asking, "Why can’t we trade in our currencies? Why are we committed to trading through the dollar?"

BRICS Currency Agenda in Focus at the Johannesburg Summit

Member nations of BRICS are planning to discuss a common currency at their upcoming leaders’ summit, scheduled on August 22 in Johannesburg, South Africa.

The South African Minister of International Relations and Cooperation, Naledi Pandor spoke on BRICS currency in an interview with Bloomberg on Tuesday. The minister said she does not like "preempting BRICS leaders’ discussions."

"It’s a matter we must discuss properly."

"I don’t think we should always assume the idea will work because economics is very difficult and you have to regard all countries, especially in a situation of low growth and emerging from crises," she added.

The Challenge to the US Dollar Dominance

The BRICS nations, comprising Brazil, Russia, India, China, and South Africa, have been working on de-dollarization, and a common BRICS currency to help member countries to move away from the US dollar dependence. A Russian official recently said he expects an agreement on a BRICS currency this year. Nineteen countries, including Saudi Arabia and Iran, have expressed interest to join the BRICS economic bloc.

The South African minister disclosed that the BRICS nations and a growing number of countries are asking:

"Why can’t we trade in our currencies? Why are we committed to trading through the dollar?"

The minister admitted: "South Africa has an internationally traded currency." However, we hold a lot of debt in dollars, so we have to approach this discussion responsibly.

The challenge to the US dollar’s dominance is a topic for debate on multiple forums among leading economists and financial analysts. A former White House economist said if the BRICS nations used only their common currency for international trade, "they would remove an impediment that now thwarts their efforts to escape dollar hegemony." However, some believe that a BRICS currency poses little to no threat to the US dollar.

What is your take on a BRICS currency displacing the US dollar as the world’s reserve currency? Please post your comment.