What will the new currency look like? How will it work? And why is the initiative being launched now? Foreign ministers of the BRICS countries met in Cape Town, South Africa, last week to discuss the tools the bloc has to get rid of the dominance of the U.S.-dominated global economic system.The talks included discussing the potential use of altcoins to shield the bloc's new development bank from sanctions and dedollarize trade more broadly.The meeting comes amid a series of reports and analysis on the new BRICS currency, its mechanisms, and the timeframe. The concept of a single currency was first floated by Russian Foreign Minister Sergey Lavrov during his trip to Africa in January, with ideas including linking it to gold, a basket of commodities or BRICS currencies. But the details still need to be clearer.Chris Devonshire Ellis, chairman of Dezan Shira & Associates, an Asian investment firm with more than 30 years of experience investing in Russia, China and other Asian markets, "seems to be widely accepted for the idea." Or another combination? This should be assessed along with current trade trends, the values of the relevant currencies, and have some sort of built-in protection as the US will certainly try to attack such a currency financially to devalue it. "It doesn't need to think about why the BRICS countries are moving to challenge the U.S.-led financial system at this moment, despite the risks involved," Devonshire Ellis said. "Accordingly, they (BRICS countries) feel that rebalancing is necessary and urge a change in the global architecture to a more sustainable model – a model that involves the development and introduction of an alternative currency that can be used when not trading with the United States – or its immediate allies." "Competition suggests that it has something to do with the U.S. dollar and the concept of this currency is to offer an irrelevant alternative that works without U.S. dollars or economic pressures. The U.S. will try to manipulate circumstances, so there's a direct relationship but that can be avoided." How will the BRICS take off on the ground?Devonshire Ellis says it would make sense for the BRICS countries to use their new currency initially limited to the five core members, plus the eight countries that applied to join, and the seventeen countries that have shown interest. to a wider audience," arguing that with the BRICS borders expanding anyway, it would cement the new currency.The investor expects the initial global impact of BRICS to be "minimal," as most countries will continue to use the dollar for trade. "The impact will not be huge at first as part of total trade even within the BRICS countries," he said, stressing that this effect will grow gradually, adding: "But reaching this level with a new currency will take time... The important thing is that they start, and then confidence in the new currency can begin to develop."Yvonshire Ellis said that the new currency needs more than a decade to be fully realized as an alternative to the dollar, "but a lot can happen to the US dollar in this time frame as well." Dr. Iqbal Surf, former chairman of the BRICS Business Council, told Sputnik that he and his colleagues on the council brainstormed the idea of a common currency some time ago, and not just a "competitor" to any other currencies as a tool for "smooth trade" between member states. The New Development Bank - known as the "BRICS Bank": "There are, of course, a number of obstacles standing in the way of the creation of such a currency, which I believe will be overcome in the coming period. "This requires a very serious commitment not only from the current BRICS countries, but from the countries that have applied to join," he said.Iqbal Surf stressed that the BRICS countries should see the common currency not as a 'react' tool to sanctions, but as a currency for the development of intra-bloc trade, adding: "Once the BRICS does this, the currency will find its natural base much like the euro." "If you want to understand the creation of BRICS, I think you need to take a look at how the euro was introduced by the EU and how it became a fundamentally unified global currency for EU countries that until then had their own separate currencies."
Can BRICS challenge the dollar and eliminate the dominance of the "economic gang"?
Highlights: BRICS leaders are preparing for a major summit in South Africa in August. The creation of a common currency is expected to be one of the main topics on the agenda. What will the new currency look like? How will it work? And why is the initiative being launched now? Foreign ministers of the BRICS countries met in Cape Town, South Africa, last week to discuss the tools the bloc has to get rid of the dominance of the U.S.-dominated global economic system.The meeting comes amid a series of reports and analysis on the new BRICS currency, its mechanisms, and the timeframe.
BRICS leaders are preparing for a major summit in South Africa in August, where the creation of a common currency is expected to be one of the main topics on the agenda.