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- Russia’s former advisor to the President has confirmed that BRICS is in the process of developing a common currency to replace the dollar.
- According to him, there is a need for political consent for this international settlement currency to be implemented.
The BRICS Alliance is getting stronger as six new countries pledged allegiance to the organization in the just-ended August summit. One interesting work in progress is the effort to replace the USD with a common currency for trade among member countries. This has been confirmed by Russia’s former advisor to the President and economist-turned-politician, Sergey Glazyev. Per his comment, the new BRICS currency may be launched by the 16th summit in 2024.
Speaking on BRICS TV, Glazyev explained that BRICS and other countries are moving towards using the national currency in international trade. This produces results since they are convertible by current transactions. According to him, trading in multiple currencies causes high costs of arbitrage of the exchange rates. Because prices are linked to the USD, there are mostly losses. In addition, there is high uncertainty in prices.
Glazyev also stated that there is the need for a new world common currency which would be based on a basket of exchange commodities. The model implies that the currency would be more stable and attractive than the leading fiat currencies.
And what are these other units? This is where the idea of introducing a new world settlement currency arises, which would become a common denominator for the formation of world prices for exchange goods. We are working on this problem. We have a model of such a currency. It is based not only on a basket of national currencies of the member countries but also on a basket of exchange commodities. The model shows that this currency will be very stable and much more attractive than the dollar, pound, and euro.
More on the BRICS Currency Under Development
For BRICS currency to be launched, there is the need for political consent from member countries. According to Glazyev, three of them have already given consent to the introduction of the new currency through their heads of state.
To transition to the settlement of national currencies, Russia as the presiding country next year will convene an international conference to sign an agreement on this.
The first basket would be automatically formed based on the pool of foreign exchange reserves. The second is the basket of the exchange-traded commodities. Countries that produce and consume most of the world exchange commodities can form the needed reserve in these commodities to make sure they provide and back up the expected international settlement currency.
One main importance of the International settlement currency is that it provides a guarantee against decisions by other countries to interfere with their mutual relations.
Secondly, the introduction of such a currency makes each country’s trade and its position in the international financial system more secure. Thirdly, the launch of such a currency will give us an opportunity for equal trade, economic and investment cooperation, because the issue of this currency and, consequently, the distribution of commission income will be regulated by an international treaty, will be transparent, and we will be sure that none of our partners abuses the issue of the world currency.
Despite the reports of BRICS developing a common currency, crypto enthusiasts are optimistic that the organization would consider Bitcoin as a replacement for the dollar.
