A new world order may be emerging as economic powerhouses step up efforts to distance themselves from dollar hegemony.
A senior Russian official has reportedly claimed that the BRICS alliance is working to create its own currency. BRICS is an acronym for five major emerging economies: Brazil, Russia, India, China and South Africa. According to local reports, Alexander Babakov, deputy chairman of the State Duma, made the comments at the St. Petersburg International Economic Forum event in New Delhi, India.
Babakov reportedly stressed the importance of both countries' efforts to develop a new payment medium, adding that digital payments may be the most promising and feasible. He also said the currency could benefit China and other BRICS countries rather than the West.
"Its composition should be based on the introduction of a new monetary relationship based on a strategy not to defend the dollar or the euro, but to form a new currency capable of benefiting our common goals." Babakov also reportedly assumed that the new currency would be backed by other commodities such as gold and rare earth elements.
This week, former Goldman Sachs chief economist Jim O'Neill called on the BRICS to expand and challenge the dollar's dominance. “The dollar plays an overly dominant role in global finance,” he wrote in a paper published in the journal Global Policy. BRICS currencies are not a new concept. In 2019, Cointelegraph reported that EU member states were discussing creating a new digital currency for a unified payment system.
In a related development this week, China and Brazil reached an agreement to trade in their own currencies. The move would remove the dollar as an intermediary, further enabling the two countries to distance themselves from the world's reserve currency. According to reports, the agreement will allow China to conduct direct trade and financial transactions with Brazil, Latin America's largest economy. The yuan will be converted directly into the Brazilian real and vice versa, not through the dollar.
China is moving ahead with its central bank digital currency project, and Brazil’s adoption of cryptocurrencies has been growing following the legalization of cryptocurrencies as a form of payment late last year. Meanwhile, Uncle Sam remains determined to continue waging war on cryptocurrencies as financial regulators tighten regulations on the fledgling industry.
