Reports are circulating that the BRICS alliance, comprising Brazil, Russia, India, China, and South Africa, is contemplating the creation of a new global trade currency, possibly backed by gold. As members of BRICS, China, Russia, and India have been significantly accumulating gold reserves, raising speculation about the alliance’s intention to establish a currency supported by the precious metal.
While the exact details remain uncertain, experts suggest that a new currency, whether gold-backed or not, could be on the horizon.
Gold Accumulation by BRICS Members
In recent fiscal years, BRICS members, particularly China, Russia, and India, have been acquiring substantial amounts of gold. For instance, China added 21 tonnes of gold to its reserves in June 2023, indicating a concerted effort to bolster its holdings. This trend is not limited to China, as the central banks of BRICS countries collectively stand out as top buyers of gold in the current year. This has led to speculation that gold could potentially serve as the foundation for a new trade currency within the alliance.
Expert Opinion and Possibilities
Andy Schectman, President of Miles Franklin, has suggested that the BRICS alliance may be considering the introduction of a new currency, potentially backed by gold. While the exact nature of the currency remains uncertain, Schectman emphasizes the likelihood of a common settlement currency emerging from BRICS. He anticipates that this move could be executed within a few months or years, representing a step toward reducing reliance on the U.S. dollar.
BRICS Ambassador’s Perspective
BRICS Ambassador Anil Sooklal from South Africa has clarified that discussions regarding the formation of a new currency are not on the alliance’s agenda. Instead, the alliance is focused on strengthening the use of local currencies for trading and settlement. Sooklal underscores that the primary goal is to deepen the utilization of local currencies in transactions among BRICS members.
BRICS Summit and Future Prospects
The upcoming BRICS summit, scheduled for August 22 to 24 in Johannesburg, is expected to address the alliance’s efforts to enhance the use of local currencies in trade. While the immediate focus may not be on introducing a new currency, the ongoing gold accumulation and discussions around trade settlement suggest that the alliance is exploring various avenues to strengthen its economic cooperation and reduce reliance on traditional global currencies.
The possibility of a new gold-backed currency for global trade within the BRICS alliance has garnered attention and speculation. While a concrete plan is yet to emerge, the accumulation of gold reserves and discussions around trade settlement highlight the alliance’s commitment to exploring innovative approaches to enhance economic cooperation among its member countries. The outcome of these discussions will likely shape the future landscape of international trade and finance.