BRICS Announces Major Shift in Global Trade
October 23, 2024
MOSCOW, RUSSIA – President Vladimir Putin said today that a new currency under the umbrella of the BRICS group will be created, and though they claimed it would increase trade among nations, it also meant a shift from reliance on the US dollar to engage in world trade. This is a significant geopolitical shift and prompts questions over a several-decade dominance in international commerce by the dollar.
It was announced at the annual BRICS summit – an indication that member nations, including Brazil, Russia, India, China, and South Africa, are increasingly in need of reducing their dependencies on Western-controlled financial systems.
A New Digital Currency for the Global South
The BRICS currency will be digital, settling its transactions on blockchain technology to allow a very secure and transparent network between the member countries. According to Putin, this should focus first on energy, agriculture, and technology trade, but it can be extended for almost all lines of trade.
“This is about financial sovereignty,” Putin said in his speech. “We cannot allow the US dollar to dictate our trade policies or economic futures.”
It falls in line with the growing interest in Central Bank Digital Currencies, or CBDCs, many governments are now developing as alternatives to the traditional fiat currencies.
Technology and Trade: A Currency for the Future
Through the blockchain technology, the BRICS currency ensures immediate payments across borders and minimizes transaction costs. This is unlike the system of SWIFT dollar, branded as slow and politically controlled; BRICS digital currency promises to settle immediately with no intermediary processes involved.
This will also facilitate higher financial inclusion by making the cost of doing business in Western banking systems cheaper and more accessible for developing countries with poor access to the system. Also, the BRICS currency will also give a more robust financial network for countries in case there is an imposition of sanctions or economic isolation by the major Western powers.
“It’s a revolution in world trade,” said economic analyst Chang Wei. “Blockchain will pave the way for smooth, sanction-proof transactions and change the very nature of international commerce.”
Western Response: A Blow to Dollar Dominance
The move has further sparked strong reactions from the United States and Europe because policymakers in these countries view the new BRICS currency as a direct threat to dollar hegemony in world markets. In fact, a senior official in the U.S. Treasury warned that such a move could “destabilize the international financial system” and diminish the dollar’s role as the world’s reserve currency.
But, as the BRICS countries stress, the dollar-based financial system has gained quite strongly against the Western economies but exposed so many emerging markets to economic-system vulnerabilities. The globalization of transactions, where more are now set to flow to the South, makes the new BRICS currency a step in a natural development of rebalancing global power dynamics.
Implications for Global Markets and Tech Giants
The BRICS currency will most likely influence not only the big financial institutions but also the technology companies applied in cross-border transactions. Companies like Visa, Mastercard, and PayPal are at risk if BRICS countries plan their independent payment networks.
The cryptocurrency market too will feel the shocks, considering that the BRICS currency would be a more stable digital version than the volatile Bitcoin and Ethereum cryptos. According to a few analysts, the BRICS movement might spur other economic blocks to speed up digital currency projects.
In the meanwhile, financial markets have already reacted; there are signs of volatility in the US dollar, while currencies like the Brazilian real and the Chinese yuan are strengthening as emerging market reserve currencies.
A New Era of Financial Independence?
A new currency for BRICS means, per definition, a shift in the global financial order and is therefore the world’s next financial move. The US dollar has led the international trade for nearly a century, but with a new currency, it would mark this collective motion done by emerging economies in reclaiming economic autonomy and challenging Western financial hegemony.
This change with blockchain technology superimposed promises the process of transactions to be faster and more transparent. Only time will tell if the BRICS currency gains wider acceptance to defeat the dollar in this battle.
As global trade adjusts to this new reality, race for adopting digital currencies is likely to heat up further. The message of the BRICS has been delivered-for now, as the era of dollar dominance is being challenged in ways the world has never seen before.
