The world’s economic powerhouses appear to be distancing themselves from US dollar hegemony as they look to create a new world order. The BRICS alliance, which is made up of Brazil, Russia, India, China, and South Africa, is reportedly working on creating its own currency, according to State Duma Deputy Chairman Alexander Babakov. The move is seen as a way for the BRICS nations to promote their shared objectives and distance themselves from US dollar hegemony.
Speaking at the St. Petersburg International Economic Forum event in New Delhi, India, Babakov stressed the importance of both nations working towards a new medium for payments. He added that digital payments could be the most promising and viable option. The new currency is expected to benefit China and other BRICS members, rather than the West.
Babakov went on to postulate that the new currency would be secured by gold and other commodities such as rare-earth elements. This move would further cement the new currency’s value and provide a more stable platform for transactions. The BRICS alliance is seen as a viable alternative to the US dollar hegemony, and the creation of a new currency could provide a way to challenge the current financial system.
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.” The BRICS nations appear to be taking this advice to heart and are exploring ways to distance themselves from the current system.
In a related development this week, China and Brazil reached a deal to trade in their own currencies. The move will remove the US dollar as the intermediary, further empowering both nations to distance themselves from the world’s reserve currency. The agreement will enable China and Brazil to conduct trade and financial transactions directly, without having to go through the greenback.
China is already leading the way in the development of 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. This move further underscores the growing interest in creating alternative currencies to challenge the US dollar’s hegemony.
While the US continues its war on crypto, financial regulators are tightening the screws on the embryonic industry. This move is seen as a way to maintain the US dollar’s dominance and prevent the emergence of alternative currencies. However, the BRICS alliance and other emerging economies appear to be forging ahead with their plans to create a new financial order, one that is more equitable and better suited to their needs.