The global monetary landscape is changing. As the influence of the US dollar falters under the weight of geopolitical tensions and aggressive economic policies, the BRICS are preparing to redefine the rules of the game. They are working to launch a new reserve currency, a bold project that could shake the supremacy of the greenback and redistribute the cards in international finance. Faced with the impact of economic sanctions, trade wars and a perceived excessive dependence on the dollar, these emerging powers are coming together to assert their economic sovereignty. But this new currency, envisioned as a direct alternative to the financial system dominated by the United States, raises as many hopes as doubts.
BRICS and the alternative to the US dollar
The BRICS initiative to create a new reserve currency comes in a context of heightened global economic tensions. For several years, the BRICS have expressed their desire to detach themselves from the dominance of the dollar, perceived as an instrument of US economic power. At the 2022 summit, Vladimir Putin announced that the bloc was actively working on a “new global reserve currency” intended to reduce dependence on Western currencies. This ambition has been reinforced by the sanctions imposed on Russia and Iran, pushing these countries to seek alternatives to circumvent US restrictions. The explicit support of Brazilian President Luiz Inacio Lula da Silva, who has constantly criticized the historical role of the dollar in international trade, illustrates this common desire to redefine the global financial order in favor of a more multipolar system less subject to the vagaries of US policies.
The BRICS currency project, while appealing on paper, raises questions about its feasibility and economic implications. If it were to come to fruition, it would represent a major blow to the supremacy of the dollar, which still dominates nearly 90 percent of global foreign exchange transactions. The project could lead to a redefinition of global financial flows, a decline in demand for dollars, and potentially a weakening of the economic position of the United States. However, the BRICS will face considerable challenges, including harmonizing the disparate economic policies of its members and managing internal tensions, such as those between India and China. For now, the project remains primarily a medium- to long-term ambition. Implementing such a currency will not happen overnight.
A fragile balance to build
The idea of a common BRICS currency faces major economic and political obstacles, which make its implementation complex and uncertain. The economic disparities between the members of the bloc constitute a major obstacle: China, with its dominant economy and its already internationalized currency, tends to impose its influence on the other countries, making the balance within the BRICS difficult to maintain. Non-Chinese countries fear an over-dependence on the yuan, to the detriment of their own currencies. India's recent refusals to make payments in yuan for its imports of Russian oil illustrate the underlying tensions. Will the BRICS be able to agree on the terms of a common currency without exacerbating internal power imbalances? Big question!
Moreover, the implementation of such a currency would require robust financial infrastructures and concerted governance, such as the BRICS Bridge project, a blockchain-based payment platform intended to facilitate transactions in central bank digital currencies. But these technological innovations will not be enough to overcome political resistance and international pressure, particularly from the United States, which views the emergence of an alternative financial system with suspicion. The project also risks being perceived as a vector of instability by markets, which could slow down the adhesion of other nations and slow the adoption of a BRICS currency on the world stage. The uncertainties are such that in the short term, the dollar retains its central role, supported by solidly anchored institutions and economic networks.
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