Analysts are beginning to consider using the future BRICS currency to circumvent U.S. sanctions and the influence of the dollar in international markets. The rise of the dollar was important in promoting the post-World War II period of economic growth, but its ubiquitous so-called weaponization has caused some countries to consider other options in international trade.
The issuance of a common BRICS currency is attracting attention
Zhou Weidi, vice president of the Institute of Economics and Business Administration at the China University of Education, weighed in on the possibility of introducing a BRICS currency to counter unilateral sanctions and the hegemony of the US dollar in international markets.
Zhou noted that the weaponization of the U.S. dollar has created distrust in the future of the U.S. dollar even within the United States, leading countries to consider alternative currencies to the U.S. dollar. He noted that after World War II, there were some advantages to using the U.S. dollar, but “later, as the world developed, including the continued development of the BRICS countries, the advantages of using the dollar in international payments began to diminish.”
However, Zhou noted that the introduction of the BRICS currency bloc, which would integrate Brazil, Russia, India, China, and South Africa, would not immediately replace the US dollar, and its creation would take many years. He concluded that,:
This does not mean that the dollar will suddenly collapse, but that the issue of de-dollarization needs to be addressed.
“For example, if such a regional currency emerges by the middle of this century, I think it will encourage the development of that country and the world as a whole,” Zhou added.
While the BRICS currency project is still in its early stages, Russia, one of the largest economies in the BRICS bloc, is moving to use the Chinese yuan for bilateral payments to avoid US sanctions. In this regard, Qiang Xiaoyun, director of the Center for Russian and Central Asian Studies at the Shanghai Institute of International Studies,stated:
Using yuan or ruble for settlement is the most promising way to break away from the Western settlement system.
Issuance Still Under Consideration
The project to issue a common currency for the BRICS bloc countries to trade began under consideration last year when Russian President Vladimir Putin said it was under consideration at the BRICS summit held in China with the aim of targeting US hegemony.
More recently, State Duma deputy Alexander Babakov said the issue of such a currency would be discussed at the next BRICSsummitto be held in Durban, South Africa, in August, along with including.