Because a BRICS currency union-unlike any before it-would not be among countries united by shared territorial borders, its members would likely be able to produce a wider range of goods than any existing monetary union. The BRICS would also be poised to achieve a level of self-sufficiency in international trade that has eluded the world’s other currency unions.

In 2022, as a whole, the BRICS ran a trade surplus, also known as a balance of payments surplus, of $387 billion – mostly thanks to China. Is it realistic to imagine the BRICS using only the bric for trade? Yes.įor starters, they could fund the entirety of their import bills by themselves. After all, Russia would be using brics, not dollars, to buy the rest of its imports. If China and Russia each used only the bric for trade, however, Russia would not have any need to park the proceeds of bilateral trade in dollars. So after bilateral transactions between the two countries, Russia tends to want to park the proceeds in dollar-denominated assets to buy the rest of its imports from the rest of the world, which still uses the dollar for trade. The impediment? Russia is unwilling to source the rest of its imports from China. Those efforts now often take the form of bilateral agreements to denominate trade in non-dollar currencies, like the yuan, now the main currency of trade between China and Russa. If the BRICS used only the bric for international trade, they would remove an impediment that now thwarts their efforts to escape dollar hegemony. Let’s call the hypothetical currency the bric. Unlike competitors proposed in the past, like a digital yuan, this hypothetical currency actually has the potential to usurp, or at least shake, the dollar’s place on the throne. dollar as the reserve currency of BRICS members. However early plans for it are, and however many practical questions remain unanswered, such a currency really could dislodge the U.S. Nevertheless, at least based on the economics, a BRICS-issued currency’s prospects for success are new. On a litany of practical questions, like how much the other BRICS nations are on board with Babakov’s proposal, for now, answers remain unclear. And the Kremlin’s habitual use of lies as an instrument of statecraft offers grounds for skepticism about anything Russia says. By one measure, the dollar is now used in 84.3 percent of cross-border trade-compared to just 4.5 percent for the Chinese yuan. But the talk has yet to turn into results. Murmurs in foreign capitals about a desire to dethrone the dollar have been making headlines since the 1960s. It’d be like a new union of up-and-coming discontents who, on the scale of GDP, now collectively outweigh not only the reigning hegemon, the United States, but the entire G-7 weight class put together.įoreign governments wanting to liberate themselves from reliance on the U.S. But a BRICS-issued currency would be different.

As one economist put it, “Europe is a museum, Japan is a nursing home, and China is a jail.” He’s not wrong. These developments complicate the narrative that the dollar’s reign is stable because it is the one-eyed money in a land of blind individual competitors like the euro, yen, and yuan. “Every night,” he said, he asks himself “why all countries have to base their trade on the dollar.” Weeks later, in Beijing, Brazil’s president, Luiz Inàcio Lula da Silva, chimed in. It is to be used for cross-border trade by the BRICS nations: Brazil, Russia, India, China, and South Africa. Last month, in New Delhi, Alexander Babakov, deputy chairman of Russia’s State Duma, said that Russia is now spearheading the development of a new currency.

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