The BRICS nations have requested guidance from the bloc’s newly established bank on the implementation of a possible shared currency, including how it could protect member countries from the sanctions imposed on Russia. This was announced following a meeting of the foreign ministers of Brazil, Russia, India, China, and South Africa on Thursday, which focused on how the bloc can increase its global influence and challenge the United States.
The use of alternative currencies was one of the significant topics discussed during the meeting. The economies of the BRICS nations have shown significant growth in recent years, and collectively, the bloc’s GDP now represents about 40% of the world’s total GDP. Therefore, the members have been discussing ways to pool their resources and challenge the dominance of the US dollar, which has long been used for international transactions.
At the Cape Town meeting, the BRICS nations agreed that a shared currency could provide a significant boost for their economies. The move would decrease their reliance on the US dollar and promote financial stability within the bloc, which has been a major concern for member states due to the recent economic turbulence. A shared currency would also help reduce transaction costs, making it easier for member states to do business with each other, thereby promoting trade.
However, the BRICS nations also recognized the challenges involved in implementing a shared currency. The members have different economic and political systems, as well as varying levels of economic development, and, therefore, they would have to navigate many issues to create a currency that works for everyone.
One significant area of concern discussed during the meeting was the risk of being impacted by sanctions. For example, Russia has been subjected to tough sanctions by the US and the EU since the annexation of Crimea in 2014. The sanctions have hit the Russian economy hard, and they have also had knock-on effects on other countries with ties to Russia.
The BRICS nations acknowledged that if they created a shared currency, they would have to protect themselves from any impact of such sanctions. They requested guidance from their development bank on how this could be achieved, especially for smaller member economies that may be more vulnerable to external pressures.
The idea of a shared currency is not new for the BRICS nations. In 2011, they announced their intention to create their own currency, the so-called “BRICS currency basket,” which would comprise the currencies of the member states. However, the plan ultimately did not materialize, and it has been speculated that this was due to disagreements among the members regarding the design and implementation of the currency.
Nonetheless, this latest move could be an indication of renewed interest in the project. The BRICS nations have already made significant investments in each other’s countries and have established a development bank to fund infrastructure projects within the bloc. A shared currency that could strengthen their economic ties and promote trade among themselves would undoubtedly boost the BRICS bloc’s standing in the global financial system.
In conclusion, the BRICS nations have requested guidance from their development bank on how they can establish a shared currency, including how to protect themselves from the impact of sanctions. While challenges persist, the move could provide significant benefits, including reducing the bloc’s reliance on the US dollar, promoting financial stability, and making trade easier.