The BRICS nations, which include two of Asia’s largest economies, are looking to explore alternative currencies with an aim to tackle the impacts of sanctions, a top minister said on Thursday after talks in South Africa.
A senior executive from the bloc’s New Development Bank (NDB) had briefed BRICS ministers about “the potential use of alternative currencies to the current internationally traded currencies,” South Africa’s foreign minister Naledi Pandor said.
She said the aim was “to ensure that we do not become victim to sanctions that have secondary effects on countries that have no involvement in issues that have led to those unilateral sanctions”.
Pandor’s comments come amid increasing efforts by emerging economies, especially China, to de-dollarise and challenge the hegemony of Western currencies, including the euro.
Once viewed as a loose association of disparate emerging economies, BRICS has in recent years taken more concrete shape.
The BRICS countries now account for 41% of the world’s population and 16% of global trade. According to UK-based economic research firm Acorn Macro Consulting, the bloc now generates approximately 31.5% of the world’s gross domestic product (GDP), compared to 30.7% for G7 countries.
The bloc’s growth was driven initially by Beijing, which faces the threat of Western sanctions over its continued military aggression against Taiwan. China claims the self-ruled island as its territory and has not ruled out the use of force for “reunification.”
Since the start of the Ukraine war in February 2022, Moscow has added to the impetus for BRICS, under pressure from sanctions imposed by the West.
In March, Russian minister Alexander Babakov reportedly said the bloc was working on creating a “new currency”, which it will present at an upcoming summit in Durban, in South Africa, in August this year.
“New Delhi, Beijing and Moscow are the nations that now institute a multipolar world that is endorsed by the majority of governments,” India’s FirstPost quoted Babakov as saying.
“[A new currency’s] composition should be based on inducting new monetary ties established on a strategy that does not defend the US dollar or euro, but rather forms a new currency competent of benefiting our shared objectives.”
Weeks later, in China, BRICS member Brazil’s president Luiz Inácio Lula da Silva also called for an end to dollar dominance.
“Every night I ask myself why all countries have to base their trade on the dollar,” he said in a speech at the NDB, headquartered in Shanghai.
Bid to reform global-decision making, even at UNSC
BRICS foreign ministers on Thursday also asserted their bloc’s ambition to rival Western powers and build up their influence in a multi-polar world.
India’s external affairs minister Subrahmanyam Jaishankar spoke of the concentration of economic power which he said “leaves too many nations at the mercy of too few”, and of the need to reform global decision-making including by the United Nations Security Council.
“Old ways cannot address new situations. We are a symbol of change. We must act,” he said.
As part of efforts to boost the bloc’s influence, BRICS ministers also discussed plans to potentially admit new members to the club.
Pandor said more work was needed to make that possible and she hoped a report on the matter would be ready by the August summit.
China’s Vice Minister Ma Zhaoxu said his country was happy about the prospect of more countries joining BRICS, as it would increase the influence of the bloc and give it more power to serve the interests of developing countries.
The BRICS bloc “was inclusive … in sharp contrast to some countries’ small circle, and so I believe the enlargement of BRICS will be beneficial to the BRICS countries,” he said.
- Reuters, with additional inputs from Vishakha Saxena