The BRICS nations intend to launch a brand-new trading currency that will be backed by gold. Recently, more nations have expressed a desire to join the BRICS. The choice was made one month before the alliance summit that is set to take place in Johannesburg, South Africa. Since then, 45 nations have expressed interest in joining the BRICS and adopting its new currency. The extension of the BRICS group may also be on the agenda of a Russia-Africa summit, according to the foreign ministry of Russia. As of now, the BRICS groups still consist of Brazil, Russia, India, China, and South Africa.
Dr. Palli Le Hola, a former state secretary general of South Africa, has evaluated the new currency proposal by the BRICS, calling it “a good choice” that will return the world to the gold standard rather than the dollar credit standard. This will take us back to South Africa’s apartheid era when the gold standard was still in effect as opposed to the dollar standard that was introduced in the 1980s. which was R7.20 in relation to 1 US dollar; at the moment, R18.19 is equivalent to 1 US dollar. He continued by saying that strengthening the single currency that will be backed by gold will be extremely beneficial because many African nations are willing to implement the new currency. It will speed up development since fewer nations will need to borrow in the dollar-dominant currency.
The group is also expected to discuss how to boost local currency fundraising and lending within the New Development Bank (NDB), or so-called BRICS bank. Local currency use will help de-risk the impact of foreign exchange fluctuations, South Africa’s Finance Minister Enoch Godongwana said.
The dollar has gained against emerging market currencies since Russia invaded Ukraine and the Federal Reserve began raising interest rates to fight inflation in early 2022, making dollar debt more costly for those countries to service.
While the NDB, which was established in 2015, is still looking at the potential use of alternative currencies, there will be no talk about a common BRICS currency during the summit, South Africa’s senior BRICS diplomat said.
With regards to economic cooperation, leaders are also likely to discuss how they can improve economic ties between their diverse economies.
They are expected to engage in a series of discussions about trade and investment opportunities in sectors ranging from energy cooperation and infrastructure development to digital economy and the job market.
Article by Samkelo Mchunu
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