The issue of establishing the central bank follows an earlier proposal by Russia and China to create an independent BRICS payment system using digital and blockchain technologies, as part of a move to end the dominance of the dollar in the global payment system.<\/p>\n\n\n\n
China and South Africa, the BRICS bloc of countries includes Brazil and India. Reports citing sources at the BRICS-funded New Development Bank (NDB) said the group is now considering the prospect of a central bank for the BRICS that would eventually issue a common currency for the group’s member states.<\/p>\n\n\n\n
The BRICS member states will meet this month, in May, to discuss the proposal in detail. The agenda of the meeting is to discuss the effectiveness and reliability of a digital currency in facilitating global trade and exchanges and minimizing the risk of sanctions.<\/p>\n\n\n\n
The creation of a central bank is the “key” to issuing a BRCIS common currency, but Russia has yet to officially clarify its stance.<\/p>\n\n\n\n
The BRICS group has been discussing the proposal for a common currency as part of the plan for de-dollarization for some time, but there is still a lack of consensus among member states on such a common currency. Neither India nor Brazil has taken a position on the BRICS plan for a digital currency or the proposal for a central bank.<\/p>\n\n\n
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The gold markets<\/strong><\/p>\n\n\n\n At the same time China, a member of BRICS, is the biggest buyer of gold from 2022 and is accumulating tons every month. The World Gold Council said China is pushing other BRICS nations to buy the precious metal as reserves rather than the US dollar. China has amassed more than 300 tonnes of gold, worth $561 billion, in the past 18 months alone, according to official figures.<\/p>\n\n\n\n US Recession Protection<\/strong><\/p>\n\n\n\n China along with the BRICS are procuring large quantities of gold as part of the de-dollarization effort. According to the speculation, BRICS and other developing countries are waiting for a major economic recession to hit the US.<\/p>\n\n\n\n The plan is to dump dollars from their foreign reserves and buy gold as a safety net against recession. If gold dominates their foreign exchange reserves against the dollar, domestic economies will not be affected by any US recession. The BRICS could use gold to protect their economies and currencies from the damage the dollar can cause during a recession.<\/p>\n\n\n\n A recession induced in the over-indebted US economy will only benefit the BRICS nations as they now move away from the dollar.<\/p>\n\n\n\n US hyperinflation<\/strong><\/p>\n\n\n\n The de-dollarization strategy could add further pressure to the US economy resulting in an oversupply of dollars in the domestic economy. If the BRICS and other countries stop using the dollar, the US economy could reach a stage of hyperinflation.<\/p>\n\n\n\n Prices of daily necessities could soar, while wages across the country remain stagnant. A series of job cuts could also not be ruled out as companies engage in cost-cutting measures.<\/p>\n\n\n <\/p>\n\n\n <\/p>\n\n\n\n Non-dollar energy market<\/strong><\/p>\n\n\n\n At the same time, the BRICS aim to control the global oil sector and reduce the use of the dollar by adopting local currencies for trade. The bloc admitted to its ranks in 2024 four new oil-producing countries: Egypt, the United Arab Emirates, Iran and Ethiopia.<\/p>\n\n\n\n An invitation to join BRICS has also been extended to leading oil exporter Saudi Arabia. The Kingdom is weighing its option to join the alliance and its entry into BRICS will change the supply dynamics of the global oil and gas industry. There are chances that Saudi Arabia will accept local currencies for oil and depreciate the dollar for payments.<\/p>\n\n\n\n According to the latest figures, about 20% of global oil payments were settled in local currencies rather than the dollar in 2023. US sanctions are a major incentive for BRICS countries to start operating in the oil sector in non-dollar currencies.<\/p>\n\n\n <\/p>\n\n\n\n The concern about sanctions<\/strong><\/p>\n\n\n\n Pressing US sanctions on developing economies is what is driving the BRICS to make payments in local currencies for oil.<\/p>\n\n\n\n China is trying to act as a geopolitical counterweight to US power. If Saudi Arabia joins BRICS, the percentage of oil transactions in local currencies will increase in the coming years.<\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" China, backed by Russia and South Africa, is planning the final assault on the still-strong dollar by introducing a new currency, to be issued…<\/p>\n","protected":false},"author":1,"featured_media":18381,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,961],"tags":[151,2627,161,4824,3391,242,1180,58,70],"class_list":["post-18380","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economic","category-financial-economics","tag-brics","tag-central-bank","tag-china","tag-currency","tag-de-dollarization","tag-gold","tag-oil","tag-russia","tag-usa"],"_links":{"self":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/18380","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18380"}],"version-history":[{"count":1,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/18380\/revisions"}],"predecessor-version":[{"id":18388,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/18380\/revisions\/18388"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/media\/18381"}],"wp:attachment":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18380"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18380"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18380"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.liberalglobe.com\/wp-content\/uploads\/2024\/05\/image-57.png\")
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