The BRICS nations, a group of five emerging economies comprising Brazil, Russia, India, China and South Africa, are working on developing a new shared currency that could reduce their dependence on the US dollar and the euro in global trade. The new currency, which has not been named yet would facilitate cross-border transactions among the BRICS members and other countries.
The idea of a BRICS currency was first proposed by Russia, which has been facing sanctions from the US and its allies over its annexation of Crimea and its involvement in the conflict in eastern Ukraine. Russia has been seeking ways to bypass the dollar-dominated international financial system and to shield itself and its partners from the impact of sanctions.
The BRICS foreign ministers discussed the new currency project at a meeting in Cape Town, South Africa, on June 1, 2023. They asked the New Development Bank (NDB), the Shanghai-based lender created by the BRICS nations in 2014, to provide guidance on how the new currency might work and what benefits it could bring.
Naledi Pandor, South Africa’s minister of international relations, told reporters after the meeting that the BRICS nations wanted to “ensure that we do not become victims to sanctions that have secondary effects on countries that have no involvement in issues that have led to those unilateral sanctions”.
Brazil’s president, Luiz Inácio Lula da Silva, who visited China in April and agreed to use the yuan in bilateral trade with Beijing, also expressed his support for the new currency initiative. He said that he wondered “why all countries have to base their trade on the dollar”.
The BRICS nations represent more than 42% of the world’s population and account for 23% of global gross domestic product and 18% of trade. They have been striving to increase their influence and voice in global affairs and to challenge the dominance of the US and its allies.
The BRICS nations are expected to discuss the new currency further at their annual summit in Johannesburg in August 2023. The summit will also include representatives from other countries that have expressed interest in joining or cooperating with the BRICS bloc. The BRICS expansion plan is another sign of their ambition to become a more inclusive and influential force in global affairs.
