The Deputy Chairman of Russia’s State Duma, Alexander Babakov, said on 30 March that the BRICS bloc of emerging economies – Brazil, Russia, India, China, and South Africa – is working on developing a “new currency” that will be presented at the organization’s upcoming summit in Durban.
“The transition to settlements in national currencies is the first step. The next one is to provide the circulation of digital or any other form of a fundamentally new currency in the nearest future. I think that at the BRICS [leaders’ summit], the readiness to realize this project will be announced, such works are underway,” Babakov said on the sidelines of the Russian-Indian Strategic Partnership for Development and Growth Business Forum.
Babakov also stated that a single currency could likely emerge within BRICS, and this would be pegged not just to the value of gold but also to “other groups of products, rare-earth elements, or soil.”
BRICS member states account for more than 40 percent of the global population and around a quarter of the global GDP. In recent months, the group has been positioning itself as the Global South’s alternative to the G7 group of nations.
Several nations in West Asia and North Africa have expressed interest in joining the bloc, including Saudi Arabia and Algeria. Last year, Iran officially applied to join BRICS.
Earlier this month, South African Foreign Minister Naledi Pandor revealed that global interest in BRICS is “huge,” adding that she had 12 letters from interested countries on her desk, including the UAE, Egypt, Argentina, Mexico, and Nigeria.
The news of a possible BRICS currency comes as a growing number of nations across the world are moving away from conducting trade in US dollars as a result of Washington’s policy of economic coercion.
This week alone, the ASEAN group of nations discussed dropping the US Dollar, Euro, Yen, and British Pound from financial transactions and instead moving to settlements in local currencies. Similarly, Brazil – the largest economy in Latin America – reached an agreement with China to enable import and export transactions between both nations to take place without using the US dollar.
Former Goldman Sachs chief economist Jim O’Neill this month called on BRICS to expand and challenge the greenback’s dominance, highlighting that Washington’s economic hegemony destabilizes other nations’ monetary policies.
“The US dollar plays a far too dominant role in global finance,” he wrote in a paper published in the Global Policy journal. “Whenever the Federal Reserve Board has embarked on periods of monetary tightening, or the opposite, loosening, the consequences on the value of the dollar and the knock-on effects have been dramatic.”