At the BRICS summit, they began to discuss the settlement currency, which will push the dollar

On the first day of the BRICS summit in South Africa, Russian Finance Minister Anton Siluanov said that the member states of the association are discussing the creation of a unit of account as an alternative to the dollar. Since the “collective West” has effectively cut Russia off from the global capital market, it is logical that the issue of financial integration with friendly countries comes to the fore for Moscow. What are the advantages of the BRICS single currency? Will it replace the dollar and when will it appear?

Talks about the introduction of their own currency for the BRICS member countries have been going on for a long time. Back in mid-January, South African Foreign Minister Naledi Pandor spoke of the need to replace payments in dollars with a “more fair” system of monetary exchange, since the dollar is designed for rich countries, and it is not beneficial for poorer countries.

In July 2023, Anton Siluanov, in his speech on BRICS issues, used the term “single unit of account”, emphasizing that it would not be an analogue of the euro, which is used by the European Union. It can be assumed that this will be some kind of single digital currency approved by all BRICS members, but this is currently from the category of fantasies. Experts spoke about the prospects for introducing a new unit of account in working with the countries of the MK association.

Evgeny Kalyanov, stock market expert at BCS World of Investments:

“It is assumed that the single unit of account of the BRICS countries will be non-cash and supranational, that is, countries will not have to abandon their national currencies, as was the case when the euro appeared in circulation. It will be used for settlements between the countries of the bloc, it will be able to express the cost of commodity deliveries.

According to the Ministry of Economic Development, at the first stage, powers of attorney may appear on the new BRICS unit of account, as well as on the creation of payment systems that allow making payments between the BRICS countries with the ratio of exchange rates. Thus, the implementation of the project can be implemented in stages.

To circulate the new single unit of account, an alternative system to SWIFT will be required. For this, BRICS Pay is being developed, which will probably be able to start functioning no earlier than 2025.”

Alexander Shneiderman, Head of Sales and Customer Support at Alfa-Forex:

“The creation of a new BRICS currency is being discussed at the summit in South Africa as an alternative to the dollar. This “single unit of account” will be a supranational currency similar to the euro. It will not replace the ruble/yuan, but will become an additional currency for international payments.

At the current BRICS summit, there will probably not be a final decision on the launch of a new currency, but the discussion of this idea underlines the serious interest of the participating countries.

The introduction of a new currency may take several decades, it will take time and money to implement. The situation in the global financial system and sanctions against some countries make the BRICS currency a stabilizing element.

The new currency will provide the BRICS countries with new opportunities for development, economic growth and support of their own economies. In the long and medium term, it can replace the dollar and the euro, becoming a strong alternative.”

Artem Deev, head of the analytical department at AMarkets:

“Some steps are already being taken on the issue of introducing a single unit of account. For example, Brazil and China signed an agreement on trade in yuan. And the New Development Bank (NDB) – created by the BRICS countries – plans to start lending in South African rand and Brazilian real. Well, the Russian authorities called for de-dollarization within the BRICS countries. Disputes about what kind of currency will be single – yuan, rubles, reais or something new – and whether it will be at all, are still going on. It is most likely that the “single currency” will be the yuan, as the representative of the strongest economy of all participants.

However, Minister Siluanov most likely meant that the BRICS countries need an analogue of the special drawing rights SDR, which is used by the IMF. That is, a kind of conditional currency based on the membership fees of the participating countries. And it will really help to get away from dollars, euros, pounds sterling or other traditional international currencies.”

Anastasia Chumak, specialist at Intercession law firm:

“In order to quickly and painlessly create an alternative to the dollar, you just need to use the yuan. The development of some kind of common currency in one form or another seems to be an extremely difficult task, given the different interests of the BRICS members and the lack of unity on many economic issues. The same India, potentially, will not be very happy with the strengthening of China, if the yuan is taken as the basis for calculations. At the same time, the rupee is not as liquid and competitive as the yuan.

If we agree that the BRICS settle accounts in yuan among themselves, then this transition will happen fairly quickly. It is extremely difficult to predict the creation of a new currency: 5, 10 or 20 years may be relevant.”