The BRICS countries are considering creating a new currency to rival the US dollar, aiming to reduce their dependence on the US currency and gain economic advantages. However, Trump’s tariff threat may hinder progress in this area.
The BRICS countries are among the fastest-growing economies in the world. They have been discussing the possibility of creating a new currency to rival the US dollar, which is used for nearly 80% of global trade.
The BRICS nations want to reduce their dependence on the US dollar, which gives the United States major economic advantages, including lower borrowing costs and exchange-rate stability. The dollar is also the main currency used to price commodities like oil and gold, making it a stable choice for investors.
Creating a joint currency would be a huge undertaking for BRICS nations, fraught with complexities due to differing political and economic systems within the bloc. The BRICS states are at varied stages of economic development and have vastly different growth rates.
The most likely option is the creation of a joint currency used purely for trade, valued based on a basket of currencies and/or commodities like gold or oil. This could work in a similar way to the International Monetary Fund’s (IMF) Special Drawing Rights (SDR).
The dollar-dominated financial system gives the United States major economic advantages, including lower borrowing costs, the ability to sustain larger fiscal deficits, and exchange-rate stability. The dollar is also the main currency used to price commodities like oil and gold, making it a stable option for investors during uncertain times.
However, Trump’s tariff threat could hinder progress in this area, making it essential to address these complexities and work towards a mutually beneficial solution.
