What is BRICS?- Edited by Aishee Biswas

The global supremacy of the US dollar in trade is being challenged by emerging economies like China and India , which are now trading in their own currencies. Moreover, countries considered either aligned or neutral towards the West in the ongoing Russian aggression in Ukraine, are joining forces to concentrate on mutual global finance.

 

It has been reported that the BRICS nations (Brazil, Russia, India, China, and South Africa) are considering the development of a shared currency for trading among themselves. An upcoming BRICS summit in South Africa, scheduled for August 2023, may present an opportunity to unveil a new financial arrangement that could potentially lead to the establishment of a common BRICS currency.

 

Alexander Babakov, the deputy chairman of the Russian parliament State Duma, recently announced at the St. Petersburg International Economic Forum event in New Delhi that the BRICS countries plan to start using domestic currencies in transactions. After this initial transition, they may consider introducing a digital or alternative form of currency. The potential for a common BRICS currency is notable, particularly given the current military standoff between India and China along the Line of Actual Control, which has created bilateral differences between the two countries.

 

According to the Russian news agency Sputnik, Babakov noted that the ongoing work on the project would be reflected in the BRICS leaders' summit, indicating their readiness to implement this initiative.

 

India has been taking continuous steps to promote the use of its currency, the rupee, as a global reserve currency in place of the US dollar. To this end, India has offered countries that are facing a shortage of dollars the option to settle their trade payments in Indian rupees. The goal of this initiative is to provide a level of protection to countries in India's immediate neighborhood and those with which it shares a significant trade relationship.

 

In 2018, China established its own commodity exchange called the Shanghai International Energy Exchange (INE) in Shanghai, which is used for oil deliveries from countries like Iran, Venezuela, and Russia. The contracts traded in INE are denominated solely in Chinese renminbi.