End of the Rand? New BRICS currency on the agenda

The 15th BRICS Summit takes place next week in Gauteng from August 22-24 2023 at the Sandton Convention Centre. And one of the big talking points will be a BRICS currency. Yes, that’s correct, if the Southern Hemisphere nations get their way, we could be saying goodbye to the Rand.

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BRICS CURRENCY

Some are calling it the ‘Euro of the South,’ while others see it as the BRICS nations’ play to dethrone the US dollar as the world’s largest currency reserve, but a common currency is a key discussion point, reports Business Day.

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However, despite the bloc’s ambitions – with a collective population of more than 3 billion – economists are saying that establishing a BRICS currency from five hugely different nations will be difficult. This is the sentiment of Lord Jim O’Neill, the economist who coined the phrase BRICS back in 2001, after he identified the economic potential of the Southern Hemisphere bloc.

‘BRICS NEVER ACHIEVED ANYTHING’

O’Neill said that the BRICS nations of Brazil, Russia, India, China and South Africa, “never achieved anything since they first started meeting.” However, calls for a gold-backed ‘trading currency’ from Brazilian President Luiz Lula da Silva and others within the bloc have revived the idea of a BRICS currency

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This sentiment was reinforced by remarks from a South African diplomat saying dozens of members had expressed an interest and a “BRICS currency could be the bloc’s biggest leap forward since SA joined in 2010.”

US DOLLAR INTERESTS

O’Neill said the reason for the BRICS currency discussions was because the dollar’s dominance over the global financial system was hurting emerging countries. “The dollar’s role is not ideal for the way the world has evolved. You’ve got all these economies who live on this cyclical never-ending twist of whatever the US Federal Reserve decides to do in their own interest.”

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Difficulties abound in establishing a BRICS currency, says O’Neill. “Are they going to create a BRICS central bank? None of these things will ever happen until those countries want to have their currencies used by people in other parts of the world,” O’Neill concluded.

The 15th BRICS Summit takes place in Gauteng from August 22-24 2023 at the Sandton Convention Centre. We will bring you all the news as it takes place at the summit.