- BRICS nations forecast the possibility of a shared digital currency within the next 5-10 years.
- This move comes as global economies search for alternative anchors amidst a declining trust in the US dollar.
In light of the current global economic landscape, experts anticipate BRICS nations to initiate discussions on a shared digital currency at the Johannesburg Summit. This assessment came as a response to sentiments that the US dollar’s reliability as a global standard might be waning, potentially giving rise to alternative international financial anchors. This report is based on insights from CNN Brazil’s recent coverage on Experts assess the Summit as a ‘strategic moment’ to start discussions on a common currency for the BRICS.
Shift Towards a Unified Digital Currency
Evandro Caciano, the head of foreign exchange at Trace Finance, believes that this summit should be the starting point for active discussions and the establishment of working groups on the matter. In his words,
“The conversation should move toward smaller and more technical groups that should tackle the subject. We need countries to be on the same page.”
Milena Araújo, an analyst from investment service provider Nexgen, shares a similar optimistic perspective. Araújo anticipates the Johannesburg event to be the platform where “discussions” on a joint digital coin are initiated, with officials potentially unveiling “a concrete feasibility plan for the proposal.”
Why Now? The Rationale Behind BRICS Digital Coin
Amidst the US experiencing one of its most significant economic crises, there’s a global inclination towards alternative financial solutions. The prevailing environment appears conducive for the inception of a BRICS coin. Brazil’s President, Luiz Inacio Lula da Silva, has expressed favor for a common currency that enhances trade between BRICS nations. As he put it earlier this year, such a coin might even replace the US dollar in trade agreements among these countries.
The Path to a BRICS Digital Currency
The idea of a BRICS digital token isn’t novel; talks have been ongoing since 2019. As the member nations intensify their efforts to move away from dollar-centric systems, their strategies have evolved. Countries like China, Brazil, and Russia are already making strides with their Central Bank Digital Currencies (CBDCs) – notably the digital yuan, the DREX, and the digital ruble. These nations have openly considered using their CBDCs for “cross-border trade.”
However, not all view the idea of a shared BRICS digital currency with enthusiasm. Lord Jim O’Neill, who originally coined the term BRICS in 2001, labeled the notion of a mutual currency for the bloc as “just ridiculous,” questioning the feasibility of creating a unified BRICS central bank.
While the upcoming summit does not officially list a shared BRICS currency on its agenda, the topic has been a recurring point of discussion at previous summits. The BRICS leaders are also slated to address potential new membership requests, with several countries, as highlighted by the Washington Post, expressing interest in joining the alliance.