BRICS was established at its inaugural meeting in Yekaterinburg, Russia, in 2009. Brazil, Russia, India, and China were the original members of the bloc, which was intended to represent the main growing economies.
South Africa joined in 2010. Collectively, these nations make up more than 40% of the world's population and over 25% of its GDP.
As the main reserve currency of the globe, the US dollar has long maintained a commanding presence in international business.
But as the BRICS countries—Brazil, Russia, India, China, and South Africa—actively consider other options, the geopolitical and economic environment is shifting.
The incoming 47th president of the United States, Donald Trump, has warned these countries that if they switch from the dollar to a new currency, they would face tariffs and other consequences.
Donald Trump emphasized the value of maintaining the dollar’s position as the global reserve currency during his 2024 campaign and the years that followed.
He threatened the BRICS countries that abandoning the dollar would have dire consequences, including as levying 100% tariffs on their products.
Trump noted that American strength and economic stability depend on the dollar’s continued dominance.
The BRICS nations have been working together to reduce their reliance on the currency. Among the attempts are the development of a unified payment system that facilitates transactions in local currencies and the exploration of alternative reserve currencies, which may be backed by digital assets or commodities.
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Russia has changed its economic strategy to rely on currencies like the Chinese yuan rather than the US dollar in reaction to Western sanctions over the conflict in Ukraine.
This shift guarantees more stable commercial connections with its allies, especially China, and enables Moscow to lessen the impact of financial restrictions imposed by Western nations.
One notable diversion from dollar-based transactions is the fact that the majority of Russian energy exports to China are now paid in yuan.
As part of its larger fiscal policies, such as the Belt and Road Initiative (BRI), China has been aggressively pushing the usage of the yuan internationally.
Through massive investment and infrastructure developments, this strategy connects China with more than 60 nations, promoting commercial relations.
China often adopts the yuan in bilateral trade agreements as part of this endeavor, urging partner countries to use the currency for international commerce.
India is also looking into other currencies for international commerce outside the dollar.
Indian federal government’s efforts to strengthen economic sovereignty include the proposal to use the rupee in some industries, such military and energy.
India’s larger plan to increase its economic influence internationally and lessen its reliance on major foreign currencies like the dollar is in line with these actions.
The goal of the proposed BRICS currency is to give member states an alternative to the dollar for international commerce.
The goal of this project is to lessen reliance on the U.S. banking system, particularly in light of geopolitical tensions and Western-imposed sanctions. key benefits include
- Commodity Backing: The currency could be tied to tangible assets like gold, oil, or other natural resources, ensuring its value is grounded in physical reserves.
- Strengthening Financial Sovereignty: By using their own currency, BRICS nations aim to reduce vulnerabilities stemming from dollar volatility and U.S.-imposed sanctions.
The topic of establishing a single Brics currency became stronger during the 2024 BRICS Summit in Kazan, Russia. Leaders stated that this new currency might promote financial stability and easier commerce throughout the union.