BRICS Currency Could 'Challenge Dominance' of Western-Led Financial Institutions
09:25 08.06.2023 (Updated: 09:26 08.06.2023)
© Sputnik . Mihail Kutusov
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The more the United States insists on using the dollar’s dominant status in the global monetary system to punish countries Washington does not like through sanctions, the more a number of countries mull creating a new currency that may challenge the dollar’s status.
Brazil, Russia, India, China and South Africa – member states of the international economic bloc BRICS – are considering introducing their own currency that may help bypass the US dollar in international trade.
Mohammed Saqib, secretary-general of the India-China Economic and Cultural Council, told Sputnik that introducing a BRICS currency “will require overcoming significant challenges of building trust and acceptance over time,” pointing out that the market is already dominated by established currencies such as the US dollar, euro and yen.
“However, many countries are frustrated with dollar dominance and keen to have an alternate dollar. Thus, it seems that BRICS currency’s acceptability will not be an issue,” he noted.
According to Saqib, this new BRICS currency could become an alternative reserve currency that would help mitigate “potential economic sanctions, vulnerability, and dependence on US monetary policy.”
“A BRICS currency would provide an elevated status for emerging economies to exert greater control over global economic affairs, enhance their bargaining power in international trade negotiations, and challenge the dominance of Western-led financial institutions,” he mused.
In order to materialize this vision, the BRICS members would have to tackle a number of challenges such as their divergent economic structures, income disparities and geopolitical differences, Saqib observed.
“It would require tremendous work with a very high level of political will, cooperation, coordination and harmonization among the member, which looks difficult but is quite possible. Things will become easier if more countries join BRICS and members keep their bilateral issues out,” he added.
That said, the BRICS countries have already “demonstrated a commitment to enhancing their economic cooperation and challenging the existing global financial order,” with the bloc’s initiatives such as the New Development Bank and the Contingent Reserve Arrangement indicating a “willingness to explore alternative financial mechanisms and reduce dependence on traditional global institutions.”
Despite the challenges its creation would entail, this as-yet-hypothetical BRICS currency would help improve economic integration and cooperation between the countries in the bloc, enabling them to “coordinate their monetary policies more effectively,” Saqib remarked.
He also suggested that such a move would result in a “shift in the global reserve currency and decrease dependence on the US dollar for international transactions.”
In recent years, the United States has eagerly capitalized on the dollar’s status as the world’s premier reserve currency by harming other countries’ economies with sanctions and sometimes resorting to even more extreme measures, such as seizing Russia’s foreign exchange reserves denominated in US dollars.
With Washington actively wielding the US dollar as a political instrument, BRICS countries announced earlier this year that they may soon consider establishing their own currency, in an apparent bid to shield themselves from the White House’s whims.
