Buzz Over Gold-Backed BRICS Currency Garners Attention
Amidst preparations for the upcoming BRICS leaders' summit, the concept of a common currency for the BRICS nations has captured significant attention. Recent reports indicate that Russia has expressed support for a gold-backed currency within the bloc, with an official announcement anticipated during the summit.
BRICS Leaders' Summit Propels Interest in Common Currency
The idea of a common BRICS currency has gained traction as countries increasingly seek to reduce their reliance on the US dollar and explore alternatives. The BRICS, comprising Brazil, Russia, India, China, and South Africa, will convene their leaders' summit in South Africa from August 22 to 24.
The BRICS' new trading currency backed by gold, is most likely to be discussed during the upcoming summit, according to a recent report by RT. Quoting a tweet from the Russian Embassy in Kenya, the report suggests growing interest from other countries to join the BRICS as well.
“The BRICS countries are planning to introduce a new trading currency, which will be backed by gold. More and more countries have recently expressed a desire to join BRICS.”
While RT's coverage has sparked headlines speculating on Russia's announcement regarding a gold-backed common currency, the linked tweet by the Russian Embassy in Kenya refers to an article from April discussing the BRICS' potential backing of its currency with gold. No fresh information has emerged regarding the establishment of a common BRICS currency.
In an interview with Bloomberg on Wednesday, Leslie Maasdorp, the vice president and chief financial officer of the BRICS Bank, unveiled the bloc's common currency plan. The BRICS Bank, which is known as the New Development Bank, was created by the BRICS nations to mobilize resources for infrastructure and sustainable development projects in emerging markets and developing countries.
The Development of Alternative Currency Is Medium to Long-Term Ambition
Maasdorp explained that while the BRICS members are moving away from the US dollar and encouraging the use of national currencies, they currently lack immediate plans to challenge the USD's dominance with a common currency. He emphasized that the BRICS Bank's anchor currency remains the US dollar.
"The development of anything alternative is indeed a medium to long-term ambition."
Although some speculate that the Chinese yuan could replace the US dollar as the world's dominant currency, Maasdorp argued that it still has a long way to go before becoming a reserve currency. He emphasized that discussions of alternative currencies within the BRICS framework are more of a medium to long-term aspiration.
“It’s going to take a very long time for currency movements to take shape, so any discussion of alternative currencies is indeed a much more medium and longer-term aspiration.”
Maasdorp stressed that the intention is not to create a new BRICS currency at present but rather to deepen the utilization of member countries' local currencies. This approach aims to strengthen the ability to shield economies from currency devaluations when borrowing in dollars. He concluded:
"All we are suggesting is that we need to deepen the use of local currencies in our member countries, and over time that is going to strengthen our ability to immunize or insulate our economies from the devaluation of our currencies if we borrow in dollars. But, there is no suggestion right now to create a BRICS currency in that sense."
The BRICS Bank's chief financial officer's statements align with those of India's External Affairs Minister, S. Jaishankar, who recently confirmed that there are no immediate plans for a new BRICS currency. The focus remains on enhancing the respective national currencies within the BRICS framework.
What is your take on the possibility of the BRICS introducing a common currency soon? Please share your opinions in the comments section below.
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