The BRICS have officially decided to leave the dollar. In the meantime, the question of the use of currency in the settlement of international transactions appears to be a point of contention between member countries. Here is what it is in the following lines.
BRICS divided over questions of monetary preferences
Tensions have arisen between India, China and Russia, three members of the BRICS. Disagreements mainly linked to the methods of payment for volumes of crude oil supplied by Russia, prioritizing in yuan, the Chinese currency.
This situation, which sees the Chinese currency strengthening its positions, is not to India’s taste. In any case, this is the conclusion that we can draw from a recent event involving the Indian Oil Company (IOC), an Indian public entity responsible for hydrocarbons.
The company suffered delays in receiving five oil shipments due to India’s reluctance to use the Chinese yuan. In this context, the country prioritizes the use of the dollar despite the common desire of the BRICS to distance themselves from the American currency.
Basically, India suspects China and Russia of using BRICS to strengthen their local currencies in the foreign exchange market. Which could therefore undermine the Indian rupee’s own internationalization efforts.
The common currency, almost an emergency now?
In this war of state monetary interests, the emergence of a common BRICS currency seems to be the solution to easing tensions between these countries. The entry of this BRICS currency onto the financial scene could be more imminent than we think.
Recently, Russian economist Sergey Glazyev revealed significant progress in the development of the future BRICS currency. A project whose ambition is to supplant the American dollar as the world’s leading reserve currency.
In a recent interview, the expert confirmed that the BRICS currency is close to being completed. “Technically, this currency is almost ready, with the necessary software and mathematical tools already in place”, said Sergey Glazyev. It now remains to obtain the “political consent” of all member countries for its circulation.
It appears that three Member States have already expressed their support for this groundbreaking initiative. Although no launch date has been specified, sources suggest the new currency could debut at the upcoming summit in Russia. Until then, the alliance will likely work to refine the infrastructure of its future currency that may involve cryptos, and garner the support needed for its successful launch.
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