Tag: Brics currency

  • BRICS currency: Will it work?

    BRICS currency: Will it work?

    BRICS countries, such as Brazil, Russia, India, China, and South Africa, are deliberating the launch of a new reserve currency using blockchain technology to store and transfer digital tokens. It will be backed by their respective currencies.

    According to reports, the proposal has come from Russia, a leading member of the group as it seeks to convince other members to build an alternative platform for international payments that would be immune to the hegemony of the West.

    The purpose of having BRICS currency is to ensure safe and secure transactions among this group of emerging economies while also bypassing the United States (US) dollar. Russian President Vladimir Putin sees it as a solution to increasing problems in settling trade payments.

    Putin, in his address, also highlighted that new economic opportunities will be created by integrating digital currencies not only for BRICS nations but also for other developing economies.

    This switching of traded currency is part of BRICS’ long-term goals, which are to evade the dependence on the US dollar in international trade and solidify the economic cooperation among emerging markets of BRICS.

    The final Kazan declaration of BRICS 2024 also stated, “We recognise the widespread benefits of faster, low cost, more efficient, transparent, safe and inclusive cross-border payment instruments built upon the principle of minimizing trade barriers and non-discriminatory access. We welcome the use of local currencies in financial transactions between BRICS countries and their trading partners.”

    While experts believe the BRICS cryptocurrency model might not be feasible, there also are concerns that non-Chinese members might increase their dependence on China’s yuan instead, leading to a rift between Beijing and Moscow.

    Notably, there have been talks of the potential launch of a Yuan-backed stablecoin as well.

    Except for India, Pakistan shares good relations with all BRICS countries and has already been trading with China in Yuan. According to a Profit report, Pakistan and China’s Yuan trade increased to over 14 per cent in 2023, up from just two per cent in 2018.

    While cryptocurrency remains an alien phenomenon in the economic corridors of Pakistan, the launch of such a currency could certainly open new trade avenues. This, however, is subject to approval for Pakistan’s inclusion in BRICS.

    With Pakistan making a formal request to join BRICS in 2023, all eyes were on the summit to find out if Islamabad’s bid would be accepted this year. Russia’s Deputy Prime Minister Alexei also expressed his support to Pakistan’s membership of BRICS during his visit to Islamabad in September.

    Foreign relations experts deemed India as a big hurdle in this process but chances became bright when reports from across the border suggested that India will give a nod to this inclusion. “One of the key takeaways of the summit is likely to be India’s green signal to Pakistan’s long-pending bid for membership in the bloc,” ABP Live reported.

    The BRICS alliance has already expanded to include Iran, Egypt, Ethiopia, the United Arab Emirates, and Saudi Arabia.

    After Pakistan’s application for membership in August 2023, Turkiye, Azerbaijan, and Malaysia have also formally applied to become members, while a few others also showed interest in joining.

    During the summit, Indian Prime Minister Narendra Modi expressed India’s support for the inclusion of new countries into the bloc. He said that during his remarks at the Closed Plenary of the 16th BRICS Summit in Russia’s Kazan on October 23.

    He further added that this process should happen only through consensus among all nations. “India is ready to welcome new countries into BRICS as Partner Countries. In this regard, all decisions should be taken by consensus, and the views of BRICS founding members should be respected. The Guiding principles, standards, criteria and procedures adopted during the Johannesburg summit, should be complied with by all members and partner countries,” he said.

    While analysts see this as a bid to thwart Pakistan’s inclusion in BRICS, a formal response remains awaited.

  • Russia’s BRICS Currency Summit 2024: Big Replacing the US Dollar?

    Russia’s BRICS Currency Summit 2024: Big Replacing the US Dollar?

    The summit is set to be attended by presidents from two dozen nations. In their opinion, this is the most significant event Russia has held for many years and is a message to the West amid wars in Ukraine. The annual BRICS currency summit began on Tuesday and is being held in Kazan, Russian President Putin’s hometown.

    The three-night conclave will be Russia’s largest gathering of world leaders in over two decades. Moreover, it comes at a time when the Kreim is embroiled in a war on Ukraine backed by Western nations.

    What is BRICS?

    BRICS globally refers to Brazil, Russia, India, China and South Africa.

    The group started in 2006, and Brazil, Russia, India, and China convened for the first BRIC summit in 2009. A year later, South Africa was included as well. The alliance’s aim is to counteract the West’s economic and political monopoly. The group sets priorities and has discussions once every year during the ensuree summit, which all members host in turn.

    In 2023, BRICS reached the international forum to call Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates after they applied to join the club. So far, Saudi Arabia transfers have grown formally; the others have been achieved.

    New BRICS Currency

    No announcement was made about launching a new BRIC currency at the 2023 BRICS summit. It was hosted in South Africa; however, this topic has been debated for a long time in several BRICS forums. In the BRICS, diverse local currencies hinder smooth trade among member states. Except for Russia, all current members possess separate local currencies. It is rational to have a single currency for trade and other reasons.

    BRIC currency

    Read Also: SCO SUMMIT 2024: Pakistan Ready to Lead the Regional Unity

    When Will Brics Currency Be Released?

    There were speculations that this new Brics nations currency would be launched at the next conference of BRICS, scheduled for 2024. Still, during an interview, former Russian diplomat Yury Ushakov opened up on the issue of BRIC currency. He presented for discussion BRICS Pay, which is a payment system built around blockchain technology, though BRICS has not officially launched it. 

    The BRICS nations, particularly China, have been on a gold-buying spree. Therefore, there is speculation that the BRICS currency will be gold-backed. This common nations currency will facilitate international trade and transactions and be usable by national and domestic businesses.

    Is the U.S. Dollar In Trouble?

    For the first time, BRICS leaders have expressed their intentions to use more national currencies than the dollar. Since last year, Brics nations currency value has increased due to the Fed’s interest rate hikes and the Russia-Ukraine war, which made dollar debt and numerous imports expensive.

    On the 22nd of February, when it became clear that Russia would be sanctioned, people began to wonder whether the East would move away from the dollar.

    “The momentum of the de-dollarization process, which is systemic due to the current development, has been getting faster,” Putin said at the summit on Tuesday.

    The dollar remains the primary currency for most international trade. As of 2017, 88% of all global currency trade involved the dollar, as evidenced by the Bank of International Settlements Data.

    The shift towards de-dollarization is not simple. It necessitates the compliance and independent decisions of every currency trader, lender, and borrower from nations across the globe to transition to another currency. The potential impact of this transition cannot be overstated.

    What’s Next For BRICS Nations Currency

    South American countries expressed interest in joining the “BRICS” countries, not Southeast countries. Russia made a case for Southeast Asian countries to join BRICS. A little later, Turkish President Erdogan met with President Xi Jinping and remarked about Turkey’s interest in joining BRICS. However, it’s been months since we last heard of Indonesia, the Philippines, or other Southeast Asian nations making formal requests to join the bloc.