As the annual BRICS summit approaches, speculation is rising about the potential launch of a common currency for international trade among the member nations.
The economic bloc, consisting of Brazil, Russia, India, China, and South Africa, has been working diligently to lessen the US dollar’s dominance in global trade, and the creation of a unique currency specific to the group has been a hot topic in recent weeks.
New currency discussions at BRICS upcoming summit
The BRICS nations are set to discuss the possible introduction of a common currency at the upcoming summit in South Africa.
It was reported that the issue would be a key talking point at the event, although some members of the group are urging caution regarding the implementation of an alternative currency.
South Africa’s Foreign Minister, Naledi Pandor, emphasized the importance of thorough discussion and consideration of all countries involved, especially given the current situation of low growth and emerging crises.
Impact on global trade and US dollar dominance
The BRICS alliance represents more than 40% of the world’s population, and their move to create a common currency could significantly impact global trade.
While foreign governments have long sought to reduce their reliance on the US dollar, their efforts have yet to produce tangible results. The dollar currently accounts for 84.3 percent of cross-border trade, compared to just 4.5 percent for the Chinese yuan.
However, the proposed BRICS-issued currency may have a better chance of success in challenging the US dollar’s dominance. Unlike previous proposals, such as a digital yuan, this potential currency could disrupt the dollar’s position as the reserve currency among BRICS members.
Challenges and opportunities for the BRICS currency
While the idea of a BRICS currency is still in its early stages, with many practical questions remaining unanswered, the economic prospects for such a currency are promising.
The creation of a common currency could potentially provide a more stable and secure trading environment for the BRICS nations and reduce their dependence on the US dollar.
However, there are also potential challenges to consider. Implementing a new currency could require significant cooperation and coordination among the member nations, as well as the establishment of new financial infrastructure to support its use.
Additionally, the success of a BRICS-issued currency would largely depend on the willingness of other countries to adopt and utilize it in international trade.
As the BRICS summit on August 22nd draws near, the world will be watching to see whether the member nations can reach an agreement on the creation of a common currency.
While there are still many obstacles to overcome, the potential benefits of a BRICS currency are substantial, and its successful implementation could signal a new era in global trade and finance.
As the BRICS nations continue to gain prominence on the world stage, their efforts to challenge the US dollar’s dominance may serve as a catalyst for significant shifts in the global financial landscape, which is already happening.
**Some of the contents of this article were gotten from the latest Bloomberg report.
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Source: https://www.cryptopolitan.com/brics-consider-new-currency-to-rival-the-usd/