At a time when the dollar reigns supreme over world trade, the BRICS alliance seemed determined to shake up this established order. For several months, this economic bloc has been exploring the possibility of freeing itself from the dollar and even creating a common currency to facilitate their trade. However, the single currency project has now been abandoned, a decision which constitutes a notable setback for the BRICS in their quest for monetary sovereignty and in their desire to challenge American domination.
The aborted BRICS single currency project
In a recent statement, Kremlin spokesperson Dmitry Peskov made official the abandonment of the idea of a single currency for the BRICS bloc. He believes that it is “not possible” at this stage to realize such an ambition. This statement is all the more surprising given that the idea of a common currency has been at the heart of the bloc's strategic discussions for months, driven by a stated desire to reduce their dependence on the American dollar. Such dependence had been accentuated by sanctions imposed on Russia by Western countries, which pushed Moscow to consider economic alternatives. But today, hopes for a common currency collapsebecause the BRICS are no longer in a position to challenge dollar hegemony in a unified manner.
The abandonment of the single currency project is thus seen as a strategic step backwards for the BRICS. Through this initiative, the bloc wanted to assert its collective power in the face of American influence, with the objective of strengthening their economic and geopolitical weight. However, economic realities and internal differences seem to have taken precedence over this unified ambition. In addition, the return of Donald Trump to the White House would also have influenced this decision, because the BRICS now seek to avoid any open confrontation with the United States on the monetary field.
A refocus on the dollar and the implications for the future
Alongside this abandonment, another major announcement made its mark. The BRICS bloc no longer aims to actively turn away from the dollar in its trade. According to Vladimir Putin, the group no longer plans to “do without the greenback” in international transactions. This about-face, once again, seems closely linked to political changes in the United States and could reflect a strategy of appeasement vis-à-vis the Trump administration. Dedollarization is a long-term process, as the dominance of the dollar remains a major obstacle for short-term initiatives.
This decision could, however, divide BRICS members. Brazil, for example, has already hinted that it might pursue some monetary diversification efforts independently, even in the absence of collective support. This refocusing around the dollar could therefore complicate the unity of the bloc, because each country seeks to defend its own interests in an unstable economic context.
With the abandonment of their single currency project and the return to the dollar in trade, the BRICS are embarking on a reconfiguration of their economic strategy. This about-face could weaken their credibility in terms of dedollarization. However, it could also provide additional room for maneuver for each member to adapt their monetary policy to their national priorities. It remains to be seen whether the bloc will be able to reinvent itself around other common initiatives and avoid fragmentation which would weaken its voice on the international scene.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
