BRICS Currency on the Rise: A Game-Changer in the International Monetary Landscape
Renowned economist Alexis Habiyaremye from the University of Johannesburg recently shared his insights on the potential impact of a common currency for the BRICS nations. In an engaging interview with Putnik, Habiyaremye highlighted the challenges such a currency could pose to the dominance of the U.S. dollar as the global reserve currency.
According to the economist, the current international monetary system gives the dollar an unfair advantage, allowing the United States to finance its deficit by simply printing money. In contrast, other countries must produce goods and services to earn dollars. To counter this, countries worldwide are exploring alternatives, with the BRICS bloc at the forefront.
The BRICS nations—Brazil, Russia, India, China, and South Africa—are considering the establishment of a shared currency that would reduce their reliance on the U.S. dollar. Habiyaremye emphasized that if effectively used for all trade transactions among BRICS countries, this currency would alleviate the burden of financing the dollar’s exorbitant privilege.
Another advantage of a BRICS currency would be escaping the extraterritorial reach of U.S. law imposed through dollar usage. It would grant these countries the freedom to avoid arbitrary U.S. law enforcement on their territories.
Habiyaremye pointed out that the economic power of the BRICS nations, as measured by purchasing power parity, already exceeds that of the Group of Seven (G7) countries. With their substantial economic output and the potential to produce the commodities and manufactured goods required for international trade, the BRICS currency could genuinely become a global currency if member nations commit to increasing trade among themselves.
However, the economist cautioned that individual countries must prioritize trade with each other and the BRICS bloc rather than with the U.S. or its monetary allies. Without enough trade between BRICS members to support the currency, it would remain mere rhetoric.
Creating a new currency for the BRICS nations requires political will from their leaders and a significant volume of trade among them to ensure economic viability. The strength of the currency hinges on these countries trading more with each other rather than with the U.S. or other dollar-dependent countries.
As the world shifts towards a multipolar financial landscape, the possibility of a BRICS currency challenges the current dominance of the U.S. dollar. Its successful implementation would not only address the disproportionate advantage enjoyed by the dollar but also reshape global finance. The journey towards a common BRICS currency, however, relies on the commitment and cooperation of these emerging economic powerhouses.
Clever Robot News Desk 8th June 2023