South Africa: The BRICS want to break away from the US dollar as an international currency
Challenging the use of the US dollar as the preferred international currency for international trade was one of the topics discussed on 22 August 2023 by the BRICS at the opening of the summit in Johannesburg of the bloc made up of Brazil, Russia, India, China and South Africa (BRICS).
Today, the ideas put forward by the BRICS are at the centre of debates for the sole reason that the member states want to set up a new monetary system different from that of the West, which has become stifling over time.
This dynamic is gathering momentum and could eventually lead to the end of US monetary hegemony.
However, dethroning the US dollar or even competing with it is no easy task. The idea of a BRICS currency backed by gold or crypto-currencies was mooted, but quickly abandoned.
Even among the most powerful economies in the bloc, there would not be enough gold to back such a currency, and the disparity in the economies of the member countries presents a challenge.
The focus now seems to be on setting up payment gateways between the organisation’s member countries, using local currencies.
The first fund-raising in South African rand by the New BRICS Development Bank encourages this solution. However, it is not certain that this will be enough.
In an interconnected global economy where productive skills are dispersed across many countries, including those outside the BRICS, payment in local currencies may not appeal to investors.
