A new world order could be emerging as economic powerhouses increase their efforts to distance themselves from US dollar hegemony.
According to reports, a top Russian official has claimed that the BRICS alliance is working on creating its own currency. BRICS is an acronym for five leading emerging economies: Brazil, Russia, India, China and South Africa.
State Duma Deputy Chairman Alexander Babakov made the comments at the St. Petersburg International Economic Forum event in New Delhi, India, according to local reports.
Babakov reportedly stressed the importance of both nations working towards a new medium for payments, adding that digital payments could be the most promising and viable.
He also said the currency could benefit China and other BRICS members, and not the West.
“Its composition should be based on inducting new monetary ties established on a strategy that does not defend the U.S.’s dollar or euro, but rather forms a new currency competent of benefiting our shared objectives.”
Babakov also reportedly postulated that the new currency would be secured by gold and other commodities such as rare-earth elements.
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.”
A BRICS currency is not a new concept. In 2019, Cointelegraph reported that members of the bloc were discussing the creation of a new digital currency for a unified payments system.
In a related development this week, China and Brazil reached a deal to trade in their own currencies. The move will remove the U.S. dollar as the intermediary, further empowering both nations to distance themselves from the world’s reserve currency.
According to reports, the agreement will enable China and the biggest economy in Latin America, Brazil, to conduct trade and financial transactions directly. Chinese yuan will be exchanged directly for the Brazilian real and vice versa instead of going through the greenback.
China is racing ahead with 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. Meanwhile, Uncle Sam remains determined to continue its war on crypto as financial regulators tighten the screws on the embryonic industry.