BRICS member countries are seeking to abandon the USD that they accuse the U.S. of weaponizing to control other countries.
Set to establish a new currency, Bitcoin and gold could back the currency which would introduce a more stable currency in the world.
Ahead of BRICS August Summit, member countries have been discussing a plan to abandon the U.S. dollar. The member countries that include Brazil, Russia, India, China, and South Africa expect more countries to join with at least 20 countries reportedly interested in joining. One of the key objectives for the union is to break away from the influence of the West and in particular de-dollarization.
Already, the member countries have been conducting international business using their local currencies. In particular, China has been buying most commodities from Russia using the Chinese currency, the yuan. In an aim to reduce their reliance on the dollar, other countries have been conducting similar trades in their local currency. However, there are still discussions about developing one common currency.
Some analysts are unconvinced by this plan. Veteran economist Jim O’Neill is one of those who thinks the idea is ‘ridiculous.’ The economist has questioned the capability of the union as well as its commitment. “They’re going to create a BRICS central bank? How would you do that? It’s embarrassing almost.” the economist noted. The economist who is now a senior adviser at the UK-based think tank Chatham House further went on to add that the bloc has never achieved anything since they first met in 2009.
However, it is now clear that the bloc is more committed than ever and interest by new member countries has peaked. More recently, Saudi Arabia has expressed its interest to join. In response, the United States has urged Saudi Arabia to continue selling oil in US dollars, after fears of switching to the Chinese yuan. Earlier in the month, India completed its first oil payment to the UAE using its local currency, the Rupee. This is an indication that the U.S. is concerned that it could easily lose its status.
This trend is set to continue but with self-interest among countries still of concern, it is more likely that member countries will need to develop a common currency. In the past, there was the suggestion that this currency will be backed by gold.
The BRICS summit is scheduled for next week when the countries will give further clarification of the member states and how the bloc will function. Although the details remain unclear until then, one thing is for sure, it will bring an economic-power shift from the West starting with dominating the US dollar.
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