It looks like there won’t be a BRICS currency yet

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On the eve of the 2024 BRICS Summit in Kazan, let’s look back at all the related news in the past week. Most importantly, we’ve learned that all the rumors about a big reveal of the gold-backed BRICS currency look like they’ll amount to nothing.

Brazil calls for increased use of national currencies

Last week, Eduardo Paes Saboia, the Brazilian Foreign Affairs Secretary for Asia and the Pacific, called for increased use of national currencies among members. This is part of the block’s efforts to de-dollarize and create an alternative payment system.

In other Brazil-related news, President Lula da Silva had to cancel his trip to Kazan after suffering a minor brain hemorrhage.

BRICS New Development Bank plans investment using member currencies

In a further push for member currencies, BRICS New Development Bank President Dilma Rousseff said the bank plans to “use national currencies for investing in the private sector of the economies of member states.”

Details as to which currencies will be used haven’t been shared, but given the Rouble has collapsed against the USD since 2022, the two obvious contenders are the Indian rupee and the Chinese RMB. China has already begun issuing loans for its Belt and Road Initiative in RMB, so this makes the most logical sense.

What about the gold-backed BRICS Unit?

In recent months, there have been increasingly loud rumors about a BRICS common currency called the BRICS Unit.

Internet sleuths have gathered information from various sources, including Russian State officials, to speculate that it will be some form of digital currency and gold-backed. Adding fuel to the fire, last week, The Bank of Russia, the Russian Ministry of Finance, and management consulting firm Yakov and Partners released a paper detailing various approaches to a BRICS payment system.

However, this weekend, Russian President Vladimir Putin appeared to throw cold water on the idea, saying the time for a BRICS common currency had not yet come. He confirmed that the block was exploring digital currencies but underscored that a cautious, long-term approach was necessary.

Why does BRICS want to de-dollarize?

BRICS hopes to counterbalance the existing world order, and part of that involves being financially independent of a U.S.-dominated system.

Talks about de-dollarizing and using national currencies have been ongoing since 2010, but they stepped up a gear in 2022 after Russia became the most sanctioned country in the world and had $300 billion of currency reserves frozen. Putin branded this an act of theft and economic war, and the rumors about a BRICS currency have been gaining momentum ever since.

Essentially, BRICS wants to be independent from the United States and the West. However, trade between China and the United States is worth $700-$800 billion annually, and many other members have valuable trading relationships with the West, so it’s a delicate balancing act.

For now, it seems there won’t be a BRICS currency to rival the U.S. dollar. Or is Putin misleading as he did in the run-up to his invasion of Ukraine and aiming for the element of surprise? We’ll find out in the next few days!

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