New currency for BRICS nations.

[Milzy]

The BRICS countries are planning to introduce a new trading currency, which will be backed by gold.
More and more counties recently express desire to join BRICS. If this happens it’s not good for the US $. How much of a threat to our economy is there concerning this?

 

[Deleted member 121]

I heard Brazil was going to leave and prosperous Poland were going to join, until they were gently informed that it would make them PRICS.

Alas, it is said that they U-turned pretty quick on that.

 

[stowie]

The BRICS countries are planning to introduce a new trading currency, which will be backed by gold.
More and more counties recently express desire to join BRICS. If this happens it’s not good for the US $. How much of a threat to our economy is there concerning this?

Hmmm.

Since the term BRICS was invented by Jim O'Neill to group fast growing economies in 2001 which were expected to dominate by 2050, the term has been used to group them together for everything. I can't help thinking that part of the reason is because the term "BRICS" sounds nice.

Russia are pushing a common trading currency hard. It is not difficult to see why. They want to circumvent sanctions which is making USD denominated trade all but impossible. China thinks it a good idea in principle because they are by far the biggest BRIC economy and feel they might be able to challenge the hegemony of the USD whilst grabbing some more power for themselves. Brazil has made vague noises - Lula likes to be seen to be making the right anti-US noises. India has said it has no plans for a BRIC currency, thus putting a significant dent in any plans.

On the other hand, a trading currency common to BRICs could be of benefit to them. International trading in USD can be expensive and subject to changes in US policy (eg. interest rate hikes). A common currency that reduces the cost of transactions would be viewed favourably. Whether a common gold backed trading currency would do this is completely another question.

For all their grouping, the BRICS are possibly as unalike politically and economically as you could imagine. Two of the countries (B+I) are huge, messy democracies with pretty diverse economies. C+R are autocratic regimes but aside from this these two economies are massively different.

The hurdles (even if every country is committed to the scheme, and India aren't and I have doubts Brazil would be massively keen outside rhetoric) are big. Where would the common currency be managed? How would it be managed? How would the fiat currencies of each member be managed? China won't relinquish central control of the Yuan and would expect to be in control of this new currency as well. Brazil will be very wary about external controls on their monetary policy. Russia is not exactly the sort of stable partner that is needed for such an undertaking. South Africa economy is simply too small to make an appreciable difference. And India is look at increasing the Rupee international presence rather than tying it to another currency.

 

[dutchguylivingintheuk]

Hmmm.

Agreed but calls from mostly communistic or otherwise isolated countries to replace the dollar together with attempts to do so are very old, and they never succeeded. Current attempts are not new either only getting a bit more attention because off Russia for obvious reasons. However Trumps campaign to produce more (fully) in the US and to move from ''made in China'' to ''made in India'' was also a direct response to China's attempts to replace the dollar. (the talk about China spy-ing/buying infuence is merely a smokescreen, surely they do it but the main issue for the us is clearly the dollar)