The project continues to make progress single currency for the BRICSan acronym that unites five important emerging economies – Brazil, Russia, India, China and South Africa – and which today includes five other members (Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates). The project was born on the occasion of last year's summit, with the aim of promoting trade exchanges between the BRICS countries, but in fact sanctioning what was defined as the de-dollarization of the global economy.
Russia and Iran on the front line
Russia and Iran, evidently, they are pursuing this project with conviction, due to the geopolitical tensions existing with the United States and in opposition to the dollar-dominated area. And the project is expected to be presented to annual summit of this year's BRICS, in the month of October 2024.
“The creation of a new single currency within the framework of the association is what Russia and Iran are working on,” he said recently the Iranian ambassador to Russia, Kazem Jalalirecalling that trade relations between the two countries are very intense and that today “over 60% of bilateral trade takes place in rubles and riyals“.
The Russian Deputy Foreign Minister Sergei Ryabkov this spring he appeared less optimistic about the progress made by the project of a single currency, which presents a certain “complexity”. “Its implementation, as we all understand – explained Ryabkov – involves, among other things, aspects such as the creation of a single issuing center, the creation of a Central Bank that sets a common discount rate, the possibility of banks member countries to ask for loans from the Central Bank”.
How the project was born
The project of a single BRICS currency, known as R5from the initials of the five currencies that compose it (Brazilian real, Russian ruble, Indian rupee, Chinese renminbi and South African rand), kicked off with last year's summit in Johannesburg. On that occasion, in conjunction with the announcement of the expansion of the organization of emerging countries from five to ten members, the Brazilian President Luiz Inacio Lula da Silvaannounced the start of the project.
“This currency will allow greater trade between countries like Brazil and South Africa without depending on the currency of a third country,” Lula explained, effectively marking the end of the international hegemony of the dollar.
How the world economy will change
With the debut of the BRICS currency and the de-dollarization of the economy there will be an upheaval in world balances, both due to the greater push towards multilateralism in trade and due to the loss of strength of the greenback on the financial side.
The new BRICS currency will in fact allow emerging countries to exchange goods and services bypass the use of settlement systems in use in the West. For example, both Russia and Iran, subject to international sanctions imposed by the US and EU, have been excluded from the international payments system SWIFT and therefore worked to connect their two local systems (MIR and SHETAB) which today communicate with each other.
Furthermore, the loss of importance of the dollar will have important impacts on the currency market, which could be more decentralized or in search of new balances other than the dollar.
