The BRICS alliance is aiming to launch a new currency in the global market to challenge the US dollar’s hegemony. BRICS want their local currency or a new tender to replace the US dollar as the world’s reserve status. The job in hand is not as easy as they think as uprooting the US dollar is a herculean task.
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The US dollar constitutes around 58% of all the world’s trade and settlements while its next competitor, the Euro is at 20%. The Chinese Yuan is far behind with a mere 3% and other local currencies are well below it. Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade.
When Will BRICS Launch Their New Currency?
The BRICS bloc has stopped providing information about the prospects of launching a new currency to challenge the US dollar. The alliance is now talking about extending bilateral trade deals with members and buying oil at discounted prices with Russia. In addition, BRICS is also looking at ways to make other developing countries accept their local currencies for trade settlements.
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On the other hand, BRICS members China, Russia, and India are convincing other nations to accept their local currencies and ditch the US dollar. They have been successful so far as the UAE, Pakistan, Saudi Arabia, Egypt, and Iran have settled a few trades in local currencies.
Coming to the BRICs currency, the alliance might discuss the prospects in the upcoming summit in October this year. As four countries have joined the bloc, BRICS will take the consensus of the new members for the currency formation.
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Launching a currency in the international market is tough as it needs to meet a set of requirements. The criteria of acceptance among other countries needs to be established for the currency to thrive and flourish.
That doesn’t seem to be on the cards as a currency gaining international prominence in a short time is slim. The markets throw hundreds of challenges every day and BRICS currency needs to withstand and survive the lashes. The US dollar, Euro, and Pound are established and trusted currencies, but that might not be the case for BRICS.
