This Wednesday, at the BRICS summit in Johannesburg, Brazilian president Luiz Inacio Lula da Silva called for the BRICS nations to create a common currency for trade and investment between each other. Officials and economists have pointed out the difficulties involved in such a project, given the economic, political and geographic disparities between Brazil, Russia, India, China and South Africa.
Brazil's president doesn't believe nations that don't use the dollar should be forced to trade in the currency, and he has also advocated for a common currency in the Mercosur bloc of South American countries. A BRICS currency "increases our payment options and reduces our vulnerabilities," he told the summit's opening plenary session.
However, South African officials had said a BRICS currency was not on the agenda for the summit. Only in July, India's foreign minister said, "there is no idea of a BRICS currency". Russian President Putin said the gathering, which he attended via videolink, would address switching trade between member countries away from the dollar to national currencies. China has not commented on the idea.
The dollar’s share of official FX reserves fell to a 20-year low of 58% in the final quarter of 2022, and 47% when adjusted for exchange rate changes, according to International Monetary Fund data. However, the dollar still dominates global trade. It is on one side of almost 90% of global forex transactions. ‘De-dollarising’ would need countless exporters and importers, as well as borrowers, lenders and currency traders across the world, to independently decide to use other currencies.
Source: reuters.com
