Naledi Pandor, the minister of international relations and cooperation for South Africa, claims that BRICS members and prospective new members are debating whether they need to rely on the US dollar to conduct business with one another.
Why can’t we trade in our own currency, they ask? Why do we insist on transacting in dollars?
South Africa has a currency that is used outside. However, you know we have to handle this subject properly because we have a lot of dollar debt.
The benefits and drawbacks of a new currency should be carefully and extensively discussed, according to Minister Pandor.
I dislike interrupting the BRICS leaders’ conversations. We must thoroughly and openly discuss this issue.
Since economics is really complicated and you need to consider all countries, especially in times of low growth when you are coming out of crises, I don’t think we should automatically assume the notion will work.
Russia’s stance on a new currency may not be as cautious as South Africa’s.
Anatoly Aksakov, the chairman of Russia’s State Duma Committee on the Financial Market, has stated that talks on a new currency are “at an early stage” and that it may be introduced as soon as this year.
According to reports, more than a dozen countries want to join BRICS.
Saudi Arabia, Iran, Argentina, the United Arab Emirates, Algeria, Egypt, Bahrain, Indonesia, two unnamed East African countries, and one undisclosed West African country are on the list.
The foreign minister of South Africa, which is getting ready to host a summit of the bloc’s leaders, said that the BRICS nations will examine whether it would be feasible to introduce a shared currency. To the detriment of the majority of emerging markets, US interest rate hikes and geopolitical tensions have increased the value of the US dollar and all commodities priced in it. Calls for alternatives to the use of the dollar as the primary global trading currency have been sparked by this.
The BRICS group, which consists of Brazil, Russia, India, China, and South Africa, has the possibility of creating its own currency. The topic will probably be discussed at a gathering of the heads of state on August 22 in Johannesburg. In a Tuesday interview in Cape Town, South Africa’s Minister of International Relations and Cooperation Naledi Pandor stated, “It’s an issue we must discuss and discuss correctly. Without trying to steer the conversation in any particular direction, she stated, “I don’t think we should always assume the idea will work, because economics is very difficult and you have to have regard for all countries, especially in a situation of low growth when you are emerging from crises.”
One of the most significant economic blocs in the world, BRICS accounts for almost a third of global economic output and more than 40% of the world’s population. Saudi Arabia and Iran are two other countries that have expressed interest in joining it.
BRICS and other countries
The BRICS and other countries have been asking why they can’t trade in their own currencies rather than the US dollar, which has sparked the talk of a shared currency for the bloc, according to Pandor. According to South African Reserve Bank Governor Lesetja Kganyago, every step toward the development of a single form of legal money will spark discussions concerning the establishment of a single central bank and the location of that bank.
He remarked on Wednesday in Johannesburg, “I don’t know how we would talk about a currency issued by a bloc of countries that are in various geographical regions since currencies are national in nature. To come to that conclusion, the other nations had to ratify a treaty handing up their respective currencies. According to the measure of buying power parity, the economies of the BRICS nations will surpass those of the Group of Seven in 2020 and were 4% larger in 2017. Even if the G-7 continues to lead when measured using market exchange rates, the IMF expects this decade’s margin to widen even more.
According to Ziad Daoud, chief emerging markets economist at Bloomberg Economics, the dollar’s dominance will shrink in a “slow-moving” manner as developing countries grow. Vestact Ltd., a Johannesburg-based money manager firm, predicts that the dollar will continue to be the leading currency for “a long time.” It stated in a note to customers that “No other currency has the recognizable quality, economic strength, and stability behind it.” “The only currency that even remotely approaches being able to replace the dollar is the euro.”
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/05/11/brics-leader-talks-on-usd-dependence-acties-countries/