BRICS: India’s ambiguous role in creating a currency

Should we or not establish a common BRICS currency? Very clearly, some members of this organization of states are in favor of the idea. Russia, for example, has clearly shown that it is not against the annihilation of all the emblems of Western power, including the dollar. Essentially, achieving such a goal involves the group of countries minting its own currency. And so far, despite the declarations and speculations, this possibility does not really seem to be unanimous. A country like India has not yet clearly stated its position. However, the country seems to be very interested in it. What does this imply ? Let’s see it together in this article.

What we know about BRICS monetary issues

Before talking about the recent development involving India on the BRICS monetary issue, an overview of the engagement of the States concerned around this subject is necessary. On this subject, certain facts are established beyond speculation. We know, for example, that the BRICS want to put an end to Western hegemony dictated for several years by several means. The dollar and the petrodollar system are one manifestation of this power. Just like the SWIFT interbank network, controlled by Western banks and used as a means of pressure on states deemed rogue.

One of the clear signs of this Western hegemony is also the authoritarian excesses that result from it. This, with the consequence, today, of a bipolarization of the world. By expanding on 1^er January 2024, following the organization’s annual summit, the group of countries reiterated its vision. Namely, roughly speaking, promoting a fairer world for all States, in all areas, starting with the economy.

In this regard, some key figures are interesting. The BRICS+, including in addition to the founding members, Iran, Egypt, Ethiopia, Saudi Arabia and the United Arab Emirates, represent a major demographic and economic weight. The BRICS+ make up 46% of the world’s population, or almost half of the planet’s inhabitants. This represents a share of 35.6% in global GDP. All this is nonsense, without significant monetary power.

While BRICS members are increasing strategic initiatives to strengthen their local currencies, the organization’s overall monetary ambition seems somewhat weakened. This is by default of union. A division potentially maintained by the fact that a country like China, which alone accounts for 52% of BRICS+ GDP, is suspected of seeking hegemony. In particular, to the detriment of a country like India which does not seem to want to give up its monetary sovereignty in favor of a community currency. This would explain why the country, like South Africa, does not speak out almost as much on the question of a common currency as Russia does. This also pushed Iran, a recent member of the organization, to call on its BRICS+ partners to accelerate the process of creating a common currency.

A semblance of a turnaround for India?

Recently, India has begun an in-depth review of the potential for a new currency within the framework of BRICS. According to reports, the country has issued a directive to a consortium of financial analysts and think tanks. Its mission, to study the viability and implications of such a currency for the country, we imagine. A way, it seems, to provoke a discussion on India’s position with regard to the creation of a future BRICS monetary unit.

According to an anonymous senior Indian official, this discussion should take center stage at the next summit scheduled for October. India would actively prepare its position. Its objective is to present it at the 16th BRICS summit planned in the Kazan region, Russia.

We know that the latter, who is facing American economic sanctions, has clearly expressed his interest in establishing a BRICS currency. In pursuit of this objective, Russia would seek to engage in substantive discussions with India, emphasizing the need for renewed dialogue on this issue.

Will India accept Russia’s appeals?

So far, India’s position on adopting the new BRICS currency remains unclear. With authorities yet to launch a study into its potential implications, it will take at least six months to grasp the nuances of India’s position on the subject. The authorities appear to be taking measured steps, which is consistent with India’s nature as a “geopolitical animal”.

Regardless, deliberations around a potential new BRICS currency are expected to remain secret until the organization’s next summit. The mystery surrounding India’s position will encourage speculation between now and then as to whether the country will ultimately adopt or reject this option.

What is certain is that the next BRICS summit promises revelations that could shake up the global financial landscape. India’s decision seems to have a significant influence on the adoption or not of this common currency.

Another great certainty that should be remembered is that the monetary question is a question of sovereignty. This being said, it requires trade-offs which are not so easy to find for the countries concerned. As for the BRICS, it is imperative to find them, whatever the options, in gold or in crypto, mentioned so far. Otherwise, the economic and financial relevance of BRICS, which the Americans doubt, could suffer.

Conclusion

To conclude, it must be remembered that India’s growing interest in a common BRICS currency raises important questions regarding the future of this initiative. Certainly, Russia is pushing for this currency. But the country appears to maintain a cautious stance in line with its geopolitical interests. What is certain is that the deliberations to come will be crucial. Especially since India’s decision could influence the adoption or rejection of this common currency. In any case, the monetary question remains a sovereignty issue for the BRICS.