Imagine the US dollar is no longer the dominant global currency. This could soon become a reality if BRICS, an alliance of Brazil, Russia, India, China, and South Africa, successfully launched its cur...
Imagine the US dollar is no longer the dominant global currency. This could soon become a reality if BRICS, an alliance of Brazil, Russia, India, China, and South Africa, successfully launched its currency. Representing more than 40% of the global population and 45% of global trade, BRICS has the potential to reshape the international financial order. But how feasible is this plan, and what challenges lie ahead?
Up until now, seven currencies are considered globally recognized currencies for international trade and foreign exchange: US Dollar(USD), Euro(EUR), British Pound(GBP), Japanese Yen(JPY), Swiss Franc(CHF), Chinese Yuan(CNY), Australian Dollar(AUD)or Canadian Dollar(CAD). But if the BRICS currency comes along while being used for the world's 53% of the trade, then it is evident that the domination of major currencies like USD, GBP, and EUR will go down. Strategically, it can be proven very effective in removing the domination of major Western countries. However, the challenging part is to bring the countries with the biggest democracies, which have heterogeneous values, cultures, religions, and languages, to the same table and agree to the proposition. Still, the countries are attempting to meet with each other and take a step towards the BRICS Currency.
Some of the Possible Counter Measures being taken by Western Countries;
1.Trade tariffs and economic pressure for BRICS countries.
On Thursday, 30 January 2025, Trump issued a warning on live television to the BRICS nation, threatening 100% tariffs on all the countries involved to replace the US dollar as a reserve currency. The threat from the president proves the possible competence of the BRICS currency.
2. Diplomatic engagements and strengthening alliances.
For instance, in 2025, the visit of Indian Prime Minister Narendra Modi to the US allowed the negotiation of tariffs and the work on a bilateral trade of up to 500 billion by 2030. Moreover, the US is strengthening the G7 & and NATO financial strategies to counter such measures. The US and EU are also looking for new trade agreements for the emerging developing nations.
3. Development of Digital dollar and promoting it.
The current US government of Donald. J. Trump is actively promoting digital currencies and developing currencies like WLFI while announcing the making of bitcoins reserve in the US, which has surged the level of demand and trade of cryptocurrencies in the global market. The US Federal Reserve is researching central bank digital currency with this government. Moreover, such policies have significantly increased the value of such digital currencies.
4. Diplomatic and Geopolitical efforts.
On the global stage, two major countries, China and Russia of BRICS, are facing diplomatic challanges and significant global sanctions respectively. In addition, United States is also trying to persuade and invest more on other developing nations of BRICS. It shows Western countries efforts in putting diplomatic pressure to break BRICS.
Benefits for BRICS nations with BRICS currency.
1. Self-protection from US Sanctions.
The United States has a history of putting sanctions on any country that it perceives as a threat economically, militarily, or geopolitically. That day won't be near when some of the BRICS nations like India, Russia, and China face much more severe sanctions. Therefore, establishing such currency helps these major developing and small countries protect themselves from such scenarios.
2. Reduce dependency on the US Dollar.
For most of the trade, all countries depend on the US dollar. That has always given the US an advantage in global trade, economy, and influence. Therefore, reducing such dependency will help during situations of emergency, war, recession, or inflation.
3. Increase the value of BRICS currency compared to Western countries.
When all countries of BRICS that hold a significant proportion of the world trade start trading on BRICS currency, the demand for the dollar is assumed to fall; hence, there is a decline in the value of the US dollar.
4. Enhance Trade among BRICS nations.
A strong bond between all BRICS nations, which are full of manufacturing power, minerals, and capabilities, will be able to take advantage of each other in terms of all sectors.
6. Stronger global influence and Geopolitical power.
Considering such factors, BRICS could emerge as more formidable geo-political and economic bloc, counter balancing alliences such as QUAD and NATO. Importantly, the voice of BRICS will be much stronger and carry much more value in the global market.
The idea of a BRICS currency is both ambitious and transformative. While the challenges are significant from economic disparities to geopolitical tensions, the potential rewards are equally compelling. If successful, a BRICS currency could begin a new era in global finance, where power is more evenly distributed.
However, the question remains: Can BRICS nations overcome their differences and work toward a common goal? Only time will tell. One thing is sure the world is watching closely as this bold vision unfolds.
