BRICS Countries To Challenge The Dominance Of The Dollar With New Currency Launch

Key Points:

• The BRICS alliance is reportedly developing its own currency to distance itself from the US dollar.
• State Duma Deputy Chairman Alexander Babakov emphasized the importance of digital payments as the most promising and viable medium for this new currency.
• China and Brazil’s deal to trade in their own currencies is part of a larger move to remove the US dollar as the intermediary, further empowering both nations and potentially challenging the dominance of the US dollar in global finance.

The BRICS alliance, comprised of Brazil, Russia, India, China, and South Africa, is reportedly working towards creating its own currency, as a means of distancing itself from the dominance of the US dollar.

This move was emphasized by State Duma Deputy Chairman Alexander Babakov at the recent St. Petersburg International Economic Forum event held in New Delhi. Babakov suggested that digital payments could be the most promising and viable medium for this new currency. It would provide a new monetary strategy that does not defend the US dollar or euro but instead forms a new currency that benefits the shared objectives of the BRICS nations. Babakov postulated that gold and other commodities, such as rare-earth elements, would secure this new currency.

This move towards a new currency comes as China and Brazil reach a deal to trade in their own currencies, enabling them to conduct trade and financial transactions directly, without the need for a middleman currency such as the US dollar. This agreement will remove the US dollar as the intermediary, further empowering both nations to move away from the world’s reserve currency.

This development is not new for the BRICS alliance, as in 2019, members of the bloc were already reported to be discussing the creation of a new digital currency for a unified payment system. However, the recent emphasis on the importance of digital payments and the securing of the new currency by gold and other commodities is a clear indication of the alliance’s commitment to this new monetary strategy.

Former Goldman Sachs chief economist Jim O’Neill called on the BRICS bloc to challenge the dominance of the US dollar in his recent paper published in the Global Policy journal, stating that the US dollar plays a far too dominant role in global finance. With China racing ahead with its CBDC project and crypto adoption in Brazil growing following its recent legalization as a payment method, this move towards a new currency by the BRICS alliance could potentially challenge the dominance of the US dollar in global finance.

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