By Remi Zeitoun
At the vibrant BRICS summit in Kazan, Russia, a bold initiative is taking shape: a new currency aimed at reducing reliance on the US dollar. The event featured Russian President Vladimir Putin unveiling a prototype of the “BRICS bill,” adorned with the flags of the five founding members: Brazil, Russia, India, China, and South Africa. The bill, which resembles a 100-unit bill, could attract the interest of countries such as Mexico, Egypt, Nigeria and Bahrain.
While BRICS leaders have yet to set a date for the launch of this new currency, the topic has been on the table for several years. Chinese President Xi Jinping emphasized the critical importance of creating a multipolar financial system during the summit, asserting that “it is urgent to reform the international financial architecture.” This desire resonates strongly in a world where dollar dominance is increasingly being challenged.
A Currency for a New Era
The future BRICS currency is more than just a new note; it is based on an innovative payment system utilizing blockchain technology. This system aims to liberate member countries from the constraints imposed by Western financial institutions such as SWIFT, thereby enhancing their economic stability. This effort fits into a broader strategy to reduce dependence on the dollar while facilitating trade among BRICS nations and potentially beyond.
Speculation also surrounds the currency’s structure: it could be backed by a mix of 40% gold and 60% local currencies, such as the Chinese yuan, Russian ruble, and Indian rupee. This mechanism would provide the new currency with a stable value, making it compatible with global economic systems—an objective dear to the bloc as it seeks to redefine the international economic order.
Skeptical Voices:
Despite these ambitions, the launch of the new currency is not without controversy. Jim O’Neill, former chief economist at Goldman Sachs and the originator of the term “BRICS,” expresses doubts about the currency’s ability to establish itself on the world stage. He highlights the internal tensions within the group, notably the territorial disputes between China and India, which could hinder the cooperation necessary for the success of this initiative.
In an interview, O’Neill remarked that despite some progress over the past fifteen years, BRICS has struggled to assert its economic influence internationally. He asserts that genuine partnership, particularly between China and India, will be crucial for the bloc to genuinely weigh in on the global financial system.
Furthermore, it was confirmed at the summit that the admission of new countries as full members of BRICS is not on the agenda for this year. While discussions have occurred, the group has opted to maintain its current composition of nine members.
In summary, as BRICS seeks to redefine the rules of the global financial game, it faces significant internal challenges. The success of their new currency will depend not only on their capacity for innovation but also on their ability to overcome the divisions that exist within the group.
The BRICS countries are not the only ones exploring alternatives. The International Monetary Fund (IMF) and the Bank for International Settlements (BIS) have developed digital currencies to replace the dollar-centric system. The BIS, through its “mBridge Project,” is already testing CBDCs in various countries with the aim of establishing a cashless global economy within the next two years.
Remi Zeitoun is the founder of an innovative startup specializing in artificial intelligence. He studied at the University of Geneva and the University of Montreal, gaining in-depth knowledge in the field of economic law. He is passionate about cryptocurrencies and the banking sector.
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