In a significant move that signals a global geopolitical shift, the BRICS nations have announced their plans to introduce a new currency backed by gold, presenting an alternative to the credit-based US dollar.With the decision made a month before the upcoming BRICS summit in Johannesburg, the initiative has attracted the attention of numerous countries eager to join this influential bloc.India’s Stand India is the only country that has not shown interest in the plans to launch a new currency.Its position on the matter is clear, as stated by External Affairs Minister Dr S Jaishankar .He emphasized earlier this month at a media interaction that there is no intention of introducing a BRICS currency and affirmed that currencies will remain a national concern for the foreseeable future.Rather than pursuing a new currency, India aims to bolster its own national currency, the Rupee, making its strength a primary objective for the Indian government.He said, “On what we will discuss at the BRICS meeting, we’ll have to see because there are many other issues – but there is no idea of a BRICS currency.”For years, countries of the Global South have actively sought to reduce their reliance on the US dollar, aiming to decrease vulnerability to the fluctuations of a single currency.Karin Costa Vazquez, Professor, Assistant Dean and Executive Director of the Center for African Latin American and Caribbean Studies at OP Jindal Global University tells Financial Express Online that the process gained momentum as Western sanctions were imposed on Russia following its intervention in Ukraine, compelling nations to explore alternative avenues for financial stability.According to Ms Vazquez, while the introduction of a new BRICS currency faces significant challenges, these discussions reflect the bloc’s commitment to exploring innovative concepts and fostering efficient policy coordination, in a bid to reshape global affairs.
In her opinion the move suggests that the BRICS nations are actively engaging in the restructuring of the international financial system, seeking greater autonomy and influence.By anchoring their currency with gold, the BRICS nations aim to provide a tangible and stable backing, diverging from the credit-based nature of the US dollar.Gold has long been considered a symbol of wealth and a store of value, and the adoption of a gold-backed currency could potentially enhance trust and confidence in the new financial system.The decision to introduce a gold-backed currency has far-reaching implications for global financial markets and the balance of power.
As more countries express interest in joining the BRICS bloc, the influence of Western powers may face a formidable challenge, as traditional power structures are redefined.The rise of the BRICS nations and their currency initiative demonstrates a growing trend towards multipolarity, where the dominance of a single currency is being questioned.However, in her opinion the path towards a gold-backed currency is not without obstacles.
Establishing a new currency requires significant coordination, infrastructure, and trust among participating nations.Additionally, it demands careful considerations regarding monetary policy, economic stability, and international trade.The BRICS nations will need to navigate these complexities to realize their vision successfully.What did the expert say? “The foundations for this are being put in place.
In 2010, the BRICS Interbank Cooperation Mechanism was established to streamline cross-border payments among BRICS banks using local currencies.Additionally, the BRICS nations have been working on a BRICS payment system to enable transactions within the BRICS without the need for currency conversion into dollars,” she says.Furthermore, Ms Vazquez states, “discussions have taken place regarding a BRICS crypto-currency and aligning the development of Central Bank Digital Currencies to enhance currency interoperability and economic integration.
Given the expressed interest of numerous countries in joining BRICS, it is probable that the group will expand its de-dollarization agenda.” Expected Agenda next month The forthcoming BRICS summit in Johannesburg will provide a crucial platform for further discussions and deliberations on the new currency proposal.Leaders from the bloc will come together to discuss the practicalities, challenges, and potential benefits of implementing a gold-backed currency.
The summit represents a milestone in the bloc’s pursuit of a more equitable and resilient global financial architecture.As the BRICS nations forge ahead with their plans, the world watches attentively, recognizing the potential impact this move may have on the existing financial order.The introduction of a gold-backed currency signifies a remarkable shift in the dynamics of global finance, as emerging economies assert their influence and challenge the status quo.
Whether this endeavour ultimately succeeds or not, the discussions surrounding a new BRICS currency highlight the growing desire for a more balanced and inclusive international monetary system..
