Tag: brics

BRICS Alliance Considers Creating New Currency

The world’s economic powerhouses appear to be distancing themselves from US dollar hegemony as they look to create a new world order. The BRICS alliance, which is made up of Brazil, Russia, India, China, and South Africa, is reportedly working on creating its own currency, according to State Duma Deputy Chairman Alexander Babakov. The move is seen as a way for the BRICS nations to promote their shared objectives and distance themselves from US dollar hegemony.

Speaking at the St. Petersburg International Economic Forum event in New Delhi, India, Babakov stressed the importance of both nations working towards a new medium for payments. He added that digital payments could be the most promising and viable option. The new currency is expected to benefit China and other BRICS members, rather than the West.

Babakov went on to postulate that the new currency would be secured by gold and other commodities such as rare-earth elements. This move would further cement the new currency’s value and provide a more stable platform for transactions. The BRICS alliance is seen as a viable alternative to the US dollar hegemony, and the creation of a new currency could provide a way to challenge the current financial system.

This week, former Goldman Sachs chief economist Jim O’Neill called on the BRICS bloc to expand and challenge the dominance of the dollar. In a paper published in the Global Policy journal, he wrote that “the U.S. dollar plays a far too dominant role in global finance.” The BRICS nations appear to be taking this advice to heart and are exploring ways to distance themselves from the current system.

In a related development this week, China and Brazil reached a deal to trade in their own currencies. The move will remove the US dollar as the intermediary, further empowering both nations to distance themselves from the world’s reserve currency. The agreement will enable China and Brazil to conduct trade and financial transactions directly, without having to go through the greenback.

China is already leading the way in the development of its central bank digital currency project, and crypto adoption in Brazil is growing following the legalization of it as a payment method in the country late last year. This move further underscores the growing interest in creating alternative currencies to challenge the US dollar’s hegemony.

While the US continues its war on crypto, financial regulators are tightening the screws on the embryonic industry. This move is seen as a way to maintain the US dollar’s dominance and prevent the emergence of alternative currencies. However, the BRICS alliance and other emerging economies appear to be forging ahead with their plans to create a new financial order, one that is more equitable and better suited to their needs.

Iran Joins BRICS to Reduce Reliance on Western Economic Systems

Iran’s recent accession to the BRICS economic organization, a coalition led primarily by China, marks a significant development in international geopolitics, particularly in the context of the country’s ongoing economic challenges and diplomatic isolation. This move, officially commencing on January 1, 2024, represents Tehran’s attempt to navigate the impacts of U.S. sanctions and its broader strategic goal of reducing reliance on Western economic systems.

Iran’s inclusion in BRICS, alongside other new members such as Saudi Arabia, Ethiopia, Egypt, Argentina, and the UAE, adds considerable weight to the bloc, which already comprises Brazil, Russia, India, China, and South Africa. This expansion reflects the group’s aspiration to reshape the global order, perceived as outdated by its members. The enlargement process, first of its kind in 13 years, underscores the bloc’s intent to challenge the existing global hierarchy and increase its influence in the Global South​​​​.

President Ebrahim Raisi of Iran views this membership as a critical achievement, linking it to the nation’s economic and diplomatic aspirations. By aligning with BRICS, Iran aims to challenge the dominance of the U.S. dollar in global trade and mitigate the effects of U.S. sanctions. However, there’s skepticism regarding the practical benefits of this membership, especially given the geopolitical tensions involving key BRICS members like Russia and China, and their complicated relations with the West​​​​.

Iran’s engagement with BRICS is part of President Raisi’s broader strategy of strengthening ties with Asian powers and neighboring countries. This approach is seen as a counterbalance to Western isolation efforts, particularly in light of the stalemate over Iran’s nuclear program. However, the effectiveness of this strategy remains uncertain, as trade relations with BRICS nations, including China, continue to be hampered by U.S. secondary sanctions. Furthermore, Iran’s recent restoration of diplomatic ties with Saudi Arabia, another new BRICS member, indicates a shift in regional dynamics, potentially impacting its engagement within the bloc​​.

The expansion of BRICS has been met with varied reactions internationally. While Chinese and Russian leaders have hailed it as a historic step towards strengthening global peace and development, the United States has downplayed its significance, not viewing BRICS as a major geopolitical competitor. This mixed reception highlights the complexities and diverse perspectives within the international community regarding the bloc’s evolving role​​.

In summary, Iran’s BRICS membership represents a strategic move aimed at diversifying its economic partnerships and reducing dependency on Western financial systems. However, the actual impact of this membership on Iran’s economy and its global standing remains to be seen, given the internal divisions within BRICS and the ongoing geopolitical tensions.

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