The five BRICS nations – Brazil, Russia, India, China, and South Africa – have agreed to promote the use of their national currencies for trade and investment before considering the creation of a common currency. The announcement came at the 14th BRICS Summit held virtually on 1st May 2023, where BRICS promoted national currencies.
BRICS prioritizes the promotion of national currencies
According to a joint statement released after the summit, the member nations recognize the importance of enhancing financial and economic cooperation among themselves. The statement reads, “We affirm our commitment to enhancing the use of our national currencies in mutual trade and investment, and to explore the potential for further cooperation in financial services, including through the promotion of local currency financing, settlement, and investment.”
The idea of a common currency has been discussed among BRICS nations for several years. However, the group has decided to prioritize the promotion of their national currencies before considering the creation of a common one. Hence, BRICS plans to promote national currencies. The move is aimed at reducing dependence on the US dollar and promoting trade among the member nations.
Benefits of promoting national currencies for BRICS nations
Experts believe that promoting national currencies will help in reducing transaction costs and currency risk, making trade and investment among BRICS nations more attractive. It will also help in increasing the use of local currencies in global trade and investment, reducing the dominance of the US dollar.
The joint statement also highlighted the importance of digital currencies in the global economy. The member nations acknowledged the potential of digital currencies to improve the efficiency and inclusiveness of financial systems. They also emphasized the need for cooperation among themselves to address the challenges posed by digital currencies.
Emphasis on digital currencies and cooperation among BRICS nations
The BRICS nations have been making efforts to enhance economic and financial cooperation among themselves in recent years. The New Development Bank, established by the BRICS nations in 2014, has provided over $30 billion in loans to member nations for infrastructure and sustainable development projects. The Contingent Reserve Arrangement, set up in 2015, provides a safety net for member nations in case of balance of payments difficulties.
The joint statement released after the summit also emphasized the importance of the United Nations in promoting international cooperation and multilateralism. The member nations reaffirmed their commitment to the principles of the UN Charter and pledged to work together to promote peace, security, and sustainable development.
Addressing challenges posed by protectionism and unilateralism
The BRICS nations have also expressed concern over the growing trend of protectionism and unilateralism in the global economy. The joint statement reads, “We are committed to upholding the multilateral trading system and opposing protectionism and unilateralism in all its forms.” The member nations have called for the reform of the World Trade Organization to make it more effective and inclusive.
The BRICS nations have also stressed the importance of addressing global challenges such as climate change, poverty, and inequality. The joint statement reads, “We recognize that global challenges require global solutions and call for enhanced international cooperation to address them.”
In conclusion, the decision of BRICS to promote national currencies before considering a common one is a significant development in the global economy. It is aimed at reducing dependence on the US dollar and promoting trade among the member nations. The joint statement also highlights the importance of digital currencies, international cooperation, and multilateralism in the global economy. The BRICS nations have reaffirmed their commitment to promoting peace, security, and sustainable development and called for enhanced international cooperation to address global challenges.
Also Read: Jack Dorsey’s Nano Bitcoin mining chip to democratize access to Bitcoin.
