HomeNewsBRICS' Golden Ticket: New Currency Challenges Dollar Dominance, Eyes on Bitcoin

BRICS’ Golden Ticket: New Currency Challenges Dollar Dominance, Eyes on Bitcoin

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  • BRICS countries are reportedly planning to introduce a gold-backed trading currency.
  • The move could challenge the U.S. dollar’s position as the global reserve currency and restructure international trading.

In an attempt to reshape global trading, the nations of BRICS (Brazil, Russia, India, China, and South Africa) are eyeing the introduction of a gold-backed currency. This revolutionary move, confirmed by officials of these nations, is seen as a strategic maneuver that could disrupt the U.S. dollar’s standing as the world’s reserve currency.

The Golden Answer to De-Dollarization?

Currently, BRICS nations rely heavily on the U.S. dollar for facilitating international trade. However, Leslie Maasdorp, Vice President and Chief Finance Officer at New Development Bank, formerly the BRICS Development Bank, mentioned a shift in this approach. He indicated a long-term goal of eradicating reliance on the U.S. dollar from their FX market, stressing more on intertrading with their respective currencies.

The development of a gold-backed currency, confirmed by the Russian Embassy in Kenya, could accelerate this de-dollarization process. It’s a bold move that could tip the scales of global economics, shaking the underpinnings of a system where a paper-printed currency’s value is backed by governmental policies.

Yet, creating a gold-backed currency is not without its hurdles. Countries may be unwilling to trade their gold for a fiat currency printed out of thin air. Additionally, the U.S. continues to hold a large appetite for gold bars, which it buys using its paper-printed money. This could trigger a chain reaction, with people swapping their hard currencies for the gold option and then selling to the U.S. at a higher price, reinforcing the U.S. dollar’s dominance.

Could Bitcoin Be the Modern Gold Standard?

In light of these potential setbacks, some experts suggest a different kind of ‘gold standard’ – Bitcoin. Known for its value storage capability and future growth prospects, Bitcoin is increasingly favored by institutional investors and some nations. BlackRock CEO Larry Fink regards Bitcoin as “digitizing the gold standard” and anticipates its mainstream adoption.

Bitcoin presents an intriguing alternative for BRICS. As a digital currency, it’s easily transferable and can be purchased in higher volumes with fiat money. It would also allow BRICS nations to keep their gold reserves intact.

The shift towards a shared BRICS currency, however, presents challenges. As the Bank of Russia’s Governor, Elvira Nabiullina, highlights, the concept requires an agreement among various stakeholders, making it complex. The current focus remains on enhancing bilateral transactions using national currencies and improving the infrastructure that connects the payment systems of BRICS nations.

The gold-backed BRICS currency proposition, fraught with obstacles, will undoubtedly be a topic of heated discussion at the upcoming BRICS summit in South Africa. While the concept may not be immediate, the very idea of such a currency has profound implications for the U.S. dollar’s dominance and the future of international trade.

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Godfrey Benjamin
Godfrey Benjamin
Godfrey Benjamin is an experienced crypto journalist whose primary goal is to educate everyone about the prospects of Web 3.0. His love for crypto was sparked during his time as a former banker when he recognized the clear advantages of decentralized money over traditional payments. Business Email: info@ethnews.com Phone: +49 160 92211628