BRICS Currency: A Potential Solution to US Dollar-Based Sanctions?
Recently, there has been a growing consideration among analysts of using a future BRICS currency as a potential solution to sidestep U.S. sanctions and decrease the influence of the dollar in international markets. Although the U.S. dollar played a significant role in the economic growth after World War II, its frequent use as a tool for unilateral sanctions has led some countries to consider other options for international trade. Zhou Weidi, deputy director of the Institute of Economics and Business Administration at Central China Pedagogical University, has weighed in on the potential implementation of a BRICS currency as a solution to this problem.
According to Zhou, the continuous weaponization of the U.S. dollar has led to distrust even within American circles about the future of the currency, and this has caused countries to explore alternative options for international settlement. While using the U.S. dollar presented many benefits after World War II, Zhou notes that its usefulness has started to decline with the world’s continuous development, including the progress of BRICS countries. However, the introduction of a BRICS currency bloc, which includes Brazil, Russia, India, China, and South Africa, is not intended to replace the U.S. dollar immediately. Instead, the creation of such a currency will take years of careful planning and implementation. Zhou emphasized the importance of addressing the issue of de-dollarization, stating that “if, for example, such a regional currency appears by the middle of this century, I think it will stimulate the development of both those countries and the whole world.”
Although the BRICS currency project is still in its early stages, Russia, one of the largest economies in the BRICS bloc, has already started using the Chinese yuan for bilateral settlements to avoid U.S. sanctions. Qiang Xiaoyun, the director of the Center of Russian-Central Asian Studies at the Shanghai Institute for International Studies, believes that using the yuan or the ruble in payments is the most promising way to move away from the Western payment system.
Issuing a common currency for transactions among the BRICS countries was first discussed last year at the China-held BRICS summit. Russian President Vladimir Putin expressed interest in this initiative, with the objective of targeting U.S. hegemony. Recently, State Duma Deputy Chairman Alexander Babakov has confirmed that the issuance of such a currency will be discussed during the next BRICS summit in Durban, South Africa, in August, along with the potential inclusion of new countries to the bloc. Although the idea of a BRICS currency is still in the early stages, it is clear that many experts believe it is a promising solution to decreasing the influence of the U.S. dollar in international markets.
Clever Robot News Desk 17th April 2023
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