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- A former World Bank Executive has shared insight into the motivation driving BRICS nations.
- With the quest to replace the US Dollar dominance, Bitcoin is a viable consideration by BRICS.
Ana Palacio, a former World Bank Executive has opined that the BRICS countries including Brazil, Russia, India, China, and South Africa may be considering a comeback in the quest for a “new order” based on recent development.
Palacio highlighted in an article that many of its members are considering “de-dollarization” and the exploration of alternatives such as the use of a shared currency to the US dollar. At least 19 countries have conveyed their interest in teaming up with BRICS, including Argentina, Turkey, and Saudi Arabia.
The former World Bank Executive claims a perceived gap between the current Western-led global governance system and the interests of some developing countries has led to the quest of seeking alternatives to the US dollar.
In the article, Palacio stated that developing economies are frustrated by the onerous conditions imposed on them by Western-dominated institutions.
They are unwilling to tolerate efforts to ‘constrain’ their economies through conservation demands or limits on technology sharing,
The West’s unwillingness to restructure global governance so that rising economies like China and India have more influence has exacerbated these frustrations. Other factors that may have fueled these grievances include economic imbalances, perceived lack of representation, geopolitical considerations, and ideological differences.
Meanwhile, BRICS is not the first to declare a desire to minimize its reliance on the US dollar; Saudi Arabia and Iran have both done so. These countries have been vocal about their desire to reduce their reliance on the US currency, especially in order to regain control of their economies.
Considerations for Bitcoin by BRICS
Though coming off as a very loose proposition, the BRICS countries may consider Bitcoin as one of its core alternative currencies. Bitcoin’s attractiveness could be highlighted for a number of reasons.
First, holding Bitcoin as reserve assets for a country might provide diversification away from the US dollar. This diversification technique may be viewed as a means of mitigating currency risks and economic instability.
Additionally, the blockchain technology that underlies Bitcoin is often seen as a disruptive force with the potential to transform financial systems and increase efficiency. By adopting Bitcoin or exploring its use, countries within the BRICS grouping could position themselves as early adopters of emerging technologies, enhancing their technological standing on the global stage.
Furthermore, by adopting Bitcoin, the BRICS countries might aim to facilitate trade and financial transactions among themselves and with other countries outside the traditional banking system. This is especially important for developing economies within the BRICS countries, where a sizable segment of the population is unbanked or underbanked.
While the BRICS countries have been strengthening their economic ties and debating alternatives to the US dollar, Bank of America experts have claimed neither the BRICS currency nor the Chinese Yuan will be able to supplant the USD anytime soon.
