In a bid to reduce US Dollar dominance in global trade, countries in the BRICS (Brazil, Russia, India, China, South Africa) Alliance are actively exploring the possibility of creating their own trade currency. Russia, in particular, has been touting the idea of a common, digital currency as early as this year. This would be backed by gold or rare-earth elements, as a means of establishing a financial system that would allow the different members of the outfit to transact with each other more freely.

Besides Russia, BRICS member China has already taken the initiative to establish a bilateral trade partnership with Brazil. This contract allows both parties to transact in their own currencies and not through the US Dollar. Interestingly, this move towards trading in national currencies has been further endorsed by former Goldman Sachs Chief Economist Jim O'Neill, who believes that the US Dollar's global supremacy is not ideal for the monetary stability of other nations.

Russia is planning to launch its digital currency, the Digital Ruble, by the end of the year. This follows a string of attempts by the country to look for alternatives to the US Dollar after the economic sanctions imposed against it following its armed conflict in Ukraine in 2022. The digital currency was initially meant to be launched in 2024 with a public pilot scheduled for April 2023. However, the pilot was postponed due to shortcomings in the country’s legal framework.

Regardless of this delay, the Russian government has indicated its interest to launch a central bank digital currency (CBDC) with cross-border payment functionalities. This could be instrumental in allowing for more efficient real-time blockchain payments. Interestingly, Oct 2024 saw reports of the country exploring the use of its digital ruble for international trade with China, further highlighting the country’s intentions towards creating a new global trade currency.

In conclusion, it is increasingly evident that BRICS countries are looking to embrace digital currency for international trade. This is in hopes of discouraging the over-dependence on the US Dollar and subsequently allowing for greater financial control on the outset of each country. With the digital ruble projected to go live this year and the favourable attitude eternally shared by the BRICS nations, we could soon be looking at the rise of a new global trade currency.



Other News from Today