The Chief Financial Officer of the New Development Bank (NDB) of the BRICS economic coalition, Leslie Maasdorp, revealed in a recent interview the coalition’s “medium to long-term ambition” to establish a new global currency that could potentially rival the US dollar. Comprised of Brazil, Russia, India, China, and South Africa, the BRICS alliance aims to enhance direct trade in their national currencies.
With a combined population of over 3 billion people, representing more than 40% of the world’s population, the BRICS countries hold substantial influence in global affairs. Their combined GDP is approximately $56.6 trillion, making them a significant economic force.
While Maasdorp emphasized that the coalition is still being prepared to introduce a new fiat currency to challenge the dominant reserve status of the US dollar, he believed this could change over time. He acknowledged that the Chinese Renminbi still has a considerable distance before posing a significant challenge to the dollar’s predominance. Furthermore, he highlighted the NDB’s current dependence on the US dollar as its anchor currency and for operational purposes.
The BRICS coalition has attracted considerable attention this year, with several nations expressing interest in joining the group. According to African Ambassador Anil Sooklal, 13 countries from Africa, Latin America, and Asia have either submitted applications or formally approached BRICS leadership seeking membership.
These plans for a new global currency come when an assessment by HSBC Asset Management warns of economic headwinds for the United States later this year, potentially leading to a global recession. The report also predicts a turbulent 2024 for Europe, grappling with its economic contraction, while the US economy is expected to face a downturn in the last quarter of this year.
Critics argue that the US government has weaponized the US dollar following Russia’s invasion of Ukraine. Sanctions, including restricting Russia’s access to foreign currency reserves, banning it from the Swift network facilitating international payments, and targeting its banks and energy companies, aim to isolate Russia and cripple its economy. However, some analysts warn that the weaponization of the dollar could unintentionally undermine its status as the world’s reserve currency and increase demand for alternative payment systems and safe-haven assets.
Among these safe havens are gold, a precious metal traditionally considered a haven for thousands of years, and Bitcoin, the flagship cryptocurrency. Larry Fink, CEO of BlackRock, the world’s largest asset manager, recently stated that he believes Bitcoin is “digitizing gold” and has the potential to revolutionize the financial system.
