- BRICS nations veer away from a common currency, focusing on de-dollarization and national currencies instead.
- Argentina, Iran, and the UAE could potentially join the BRICS alliance during the upcoming August summit.
In an unprecedented pivot, BRICS countries are diverting their attention away from the proposition of a shared currency, instead focusing on promoting national currencies in international trade and reducing reliance on the U.S. dollar. This stance was recently confirmed by Anil Sooklal, South Africa’s diplomat in charge of BRICS relations.
The Golden Alternative: A Throwback to the Bretton Woods System
This BRICS initiative resonates with historical instances of international monetary restructuring. The notion of anchoring an international currency system in gold takes us back to the Bretton Woods conference of 1944. In the wake of the currency chaos during the Great Depression, the international community assembled a new monetary system centered around gold, pegging the U.S. dollar to gold at a fixed rate of $35 per ounce.
This system remained operational until 1971 when the U.S. dollar was uncoupled from its gold backing, ending the Bretton Woods system. Now, it appears that BRICS, led by Russia and China, is rekindling the idea of a gold-based currency framework to serve as an alternative to the U.S. dollar and Euro.
While details are sparse at present, the upcoming BRICS summit in August, to be hosted by South Africa, is expected to provide further insight. The agenda will cover a wide range of topics, including the possible expansion of the BRICS bloc, the ongoing conflict in Ukraine, and Russia and China’s proposition of a gold-based international currency system.
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New Potential BRICS Alliance Members
In addition to these significant topics, another highlight of the upcoming BRICS Summit will be the potential addition of three new countries to the BRICS Alliance. The countries in the spotlight are Argentina, Iran, and the United Arab Emirates (UAE).
Argentina’s quest to join BRICS has been marked by the nation’s efforts to accelerate de-dollarization, evidenced by its shift from the U.S. Dollar to the Chinese Yuan. Iran, on the other hand, has already submitted its official application to join BRICS, with China endorsing its inclusion. Lastly, the UAE, with its diverse economy, could strengthen the BRICS bloc’s economic capacity, offering a substantial challenge to the dominance of the U.S. dollar.
Thus, the landscape of international trade is poised for potential transformation, as BRICS nations chart a new course towards de-dollarization and broaden their ranks.
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