Economic superpowers are stepping up their efforts to break free from US dollar hegemony, raising the possibility of the emergence of a new global order.
A senior Russian official reportedly stated that the BRICS group is aiming to develop its own currency. The name BRICS stands for Brazil, Russia, India, China, and South Africa, five of the world's largest rising economies.
Local media reported that Alexander Babakov, the deputy chairman of the State Duma, made the remarks at the St. Petersburg International Economic Forum occasion in New Delhi, India.
According to reports, Babakov emphasized the significance of both countries working toward a new form of payment, noting that digital payments may be the most promising and practical.
He said that all BRICS nations may benefit from the currency.
“Its composition should be based on inducting new monetary ties established on a strategy that does not defend the US's dollar or euro, but rather forms a new currency competent of benefiting our shared objectives.”
According to reports, Babakov further hypothesized that the new currency will be backed by rare-earth elements, gold, and other commodities.
Jim O'Neill, a former head economist at Goldman Sachs, urged the BRICS group to grow and challenge the dollar's hegemony this week. In a paper published in the Global Policy journal, he wrote:
“The U.S. dollar plays a far too dominant role in global finance.”
The idea of a BRICS currency is not new. Members of the bloc were reportedly debating the development of a new digital currency for a unified payments system in 2019.
This week, China and Brazil agreed to start trading in their own currencies, which is a connected event. The action will enable both countries to further distance themselves from the US dollar as the global reserve currency by removing the US dollar as the middleman.
Brazil, the largest economy in South America, and China would be able to conduct their commercial and financial activities directly thanks to the deal, sources claim. Instead of flowing through the dollar, Chinese Yuan will be converted into Brazilian Real and vice versa.
China is moving quickly with its CBDC initiative, while Brazil's acceptance of cryptocurrencies is increasing since the country legalized them as a form of payment late last year. Uncle Sam is still committed to waging war on cryptocurrency, even as banking authorities tighten the noose on the fledgling sector.