Foreign PolicyForeign Policy

A BRICS currency could shake the dollar’s dominance

By Joseph W. Sullivan

24 Apr 2023 · 7 min read

informed Summary

  1. Russia is leading the development of a new currency for cross-border trade by the BRICS nations (Brazil, Russia, India, China, and South Africa), which could potentially displace the U.S. dollar as the reserve currency of these countries. This comes as part of a broader push for de-dollarization among these nations.

Talk of de-dollarization is in the air. Last month, in New Delhi, Alexander Babakov, deputy chairman of Russia’s State Duma, said that Russia is now spearheading the development of a new currency. It is to be used for cross-border trade by the BRICS nations: Brazil, Russia, India, China, and South Africa. Weeks later, in Beijing, Brazil’s president, Luiz Inàcio Lula da Silva, chimed in. “Every night,” he said, he asks himself “why all countries have to base their trade on the dollar.”

These developments complicate the narrative that the dollar’s reign is stable because it is the one-eyed money in a land of blind individual competitors like the euro, yen, and yuan. As one economist put it, “Europe is a museum, Japan is a nursing home, and China is a jail.” He’s not wrong. But a BRICS-issued currency would be different. It’d be like a new union of up-and-coming discontents who, on the scale of GDP, now collectively outweigh not only the reigning hegemon, the United States, but the entire G-7 weight class put together.

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