How Would a New BRICS Currency Affect the US | Commodities
The BRICS nations, initially composed of Brazil, Russia, India, China and South Africa, have had many discussions about establishing a new reserve currency backed by a basket of their respective currencies.
A BRICS currency was a subject at the
2024 BRICS Summit that occurred October 22 to 24 in Kazan, Russia. At the summit, the BRICS nations continued their discussions of creating a probably gold-backed currency, often known as the “Unit,” as an various to the US greenback.
The potential BRICS currency would permit these nations to say their financial independence whereas competing with the present worldwide financial system. The present system is
dominated by the US greenback, which accounts for about 90 p.c of all currency trading. Until just lately, almost one hundred pc of oil trading was carried out in US {dollars}; nevertheless, in 2023, one-fifth of oil trades had been reportedly made utilizing non-US greenback currencies.
Central to this ongoing state of affairs is the US trade conflict with China, in addition to US sanctions on China and Russia. Should the BRICS nations set up a new reserve currency, it could probably considerably impression the US greenback, probably resulting in a decline in demand, or what’s often known as
de-dollarization. In flip, this may have implications for the United States and world economies.
Another issue is former US president Donald Trump returning for a second time period starting on January 20. Trump’s America-first insurance policies are anticipated to drive up the worth of the greenback in comparison with its world counterparts, as was already on show the day following his election win on November 5 as China’s yuan, Russia’s ruble, Brazil’s actual, India’s rupee and South Africa’s rand all fell. This may in flip push these BRICS member nations to search for new paths to maneuver away from the US greenback.
At the 2024 BRICS summit,
Russian President Vladimir Putin appeared on stage holding what appeared as a prototype of a attainable BRICS banknote. However, he appeared to back away from earlier aggressive requires de-dollarization, stating the purpose of the BRICS member nations is to not transfer away from the US dollar-dominated SWIFT platform, however moderately to discourage the “weaponization” of the US greenback by developing various systems for utilizing native currencies in financial transactions between BRICS international locations and with trading companions.
“We are not refusing, not fighting the dollar, but if they don’t let us work with it, what can we do? We then have to look for other alternatives, which is happening,” he said.
It’s nonetheless too arduous to foretell if and when a BRICS currency might be launched in 2025 or past, however it’s a good time to have a look at the potential for a BRICS currency and its attainable implications for buyers.
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Why do the BRICS nations wish to create a new currency?
The BRICS nations have a slew of causes for eager to set up a new currency, together with current world financial challenges and aggressive US overseas insurance policies. They wish to higher serve their own financial pursuits whereas lowering world dependence on the US greenback and the euro.
In current years, the US has positioned quite a few sanctions on Russia and Iran. The two international locations are working collectively to result in a BRICS currency that may negate the financial impacts of such restrictions, in keeping with Iranian Ambassador to Russia Kazem Jalal, talking at a press convention during the Russia–Islamic World: KazanForum in May 2024.
Some specialists consider that a BRICS currency is a flawed concept, as it could unite international locations with very totally different economies. There are additionally considerations that non-Chinese members would possibly increase their dependence on China’s yuan as a substitute. That mentioned, when Russia demanded in October 2023 that India pay for oil in yuan as Russia is struggling to make use of its extra provide of rupees, India refused to make use of something different than the US greenback or rupees to pay.
When will a BRICS currency be launched?
There’s no definitive launch date as of but, however the international locations’ leaders have mentioned the risk at size.
Looking back at the timeline of BRICS currency discussions, during the 14th BRICS Summit, held in mid-2022, Russian President Vladimir Putin mentioned the BRICS international locations plan to problem a “new global reserve currency,” and are able to work overtly with all honest trade companions.
In April 2023, Brazilian President Luiz Inacio Lula da Silva confirmed help for a BRICS currency, commenting, “Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries? Who decided that the dollar was the (trade) currency after the end of gold parity?”
In the lead up to the 2023 BRICS Summit final August, there was hypothesis that an announcement of such a currency could possibly be on the desk. This proved to be wishful considering, nevertheless.
“The development of anything alternative is more a medium to long term ambition. There is no suggestion right now to creates a BRICS currency,” Leslie Maasdorp, CFO of the New Development Bank, instructed Bloomberg at the time. The bank represents the BRICS bloc.
Most just lately, authorities officers in Brazil, which took the rotating presidency of the BRICS group for 2025, have mentioned there are no plans to take any important steps towards a BRICS currency. However, measures to scale back the reliance on the US greenback are very a lot on the desk with cross-border cost systems, together with exploring blockchain technology, set to be a main theme at the 2025 BRICS summit to be hosted in Rio de Janeiro in July, reported Reuters.
Which nations are members of BRICS?
As of 2025, there are 10 BRICS member nations: Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates.
The group was initially composed of the 4 nations Brazil, Russia, India and China and named BRIC, which it modified to BRICS when South Africa joined in 2010.
At the 2023 BRICS Summit, six international locations had been invited to grow to be BRICS members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates (UAE). All however Argentina and Saudi Arabia formally joined the alliance in January 2024, and in 2025, Indonesia turned the tenth full member of BRICS.
Additionally, at the 2024 BRICS Summit, 13 nations signed on as BRICS accomplice international locations, which aren’t but full-fledged members: Algeria, Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Vietnam and Uzbekistan.
The expanded group of 10 full member international locations is usually known as BRICS+, though BRICS’s identify hasn’t formally modified.
What would the benefits of a BRICS currency be?
A new currency may have a number of advantages for the BRICS international locations, together with more environment friendly cross-border transactions and elevated financial inclusion. By leveraging blockchain technology, digital currencies and sensible contracts, the currency may revolutionize the world financial system. Thanks to seamless cross-border funds, it may additionally promote trade and financial integration amongst the BRICS nations and past.
A new BRICS currency would additionally:
What is Donald Trump’s stance on a BRICS currency?
New US President Donald Trump has not been shy about upping the ante on American protectionism together with his plans to slap tariffs on imported items starting this 12 months. During the first US Presidential Debate between him and Vice President Kamala Harris on September 10 final 12 months, Trump doubled down on his pledge to punish BRICS nations with strict tariffs in the event that they search to maneuver away from the US greenback as the world currency.
He is taking a significantly sturdy stance towards China, threatening to implement 60 p.c to one hundred pc tariffs on Chinese imports, though these hefty tariffs can be paid by American firms and shoppers buying Chinese merchandise, not by China itself.
In early December, Trump posted an even more direct risk to BRICS nations on the social media platform Truth Social. “We require a commitment from these countries that they will neither create a new Brics currency nor back any other currency to replace the mighty US dollar or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US economy,” he wrote.
In response to Trump demanding a “commitment” from BRICS nations to not problem the supremacy of the US greenback, Kremlin spokesperson Dmitry Peskov sounded much less than threatened.
“More and more countries are switching to the use of national currencies in their trade and foreign economic activities,” Peskov mentioned, per Reuters. “If the U.S. uses force, as they say economic force, to compel countries to use the dollar it will further strengthen the trend of switching to national currencies (in international trade).”
How will Trump’s tariffs have an effect on BRICS nations?
If US President Donald Trump had been to return by way of on his promise to enact one hundred pc tariffs on BRICS nations the consequence may show expensive for all events concerned. “The action would result in slower growth and higher inflation than otherwise in the US and most of the targeted economies,” in keeping with evaluation by the Peterson Institute for International Economics.
Of all the BRICS member nations, China would probably expertise slower GDP growth the worst as the United States is its largest trading accomplice. One silver lining for China is that its disciplined central bank will help to put it aside from accelerated inflation.
Trump’s 25 p.c tariff on metal and aluminum imports set on March 12, 2025 will impression Brazil and China in addition to the UAE. Brazil ranks in the high three sources for US metal imports; whereas China and the UAE signify important sources of US aluminum imports.
How would a new BRICS currency have an effect on the US greenback?
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For a long time, the US greenback has loved unparalleled dominance as the world’s main reserve currency. According to the US Federal Reserve, between 1999 and 2019, the greenback was utilized in 96 p.c of worldwide trade invoicing in the Americas, 74 p.c in the Asia-Pacific area and 79 p.c in the relaxation of the world.
According to the Atlantic Council, the US greenback is utilized in roughly 88 p.c of currency exchanges, and 59 p.c of all overseas currency reserves held by central banks. Due to its standing as the most generally used currency for conversion and its use as a benchmark in the forex market, nearly all central banks worldwide maintain {dollars}. Additionally, the greenback is used for the overwhelming majority of oil trades.
Although the greenback’s reserve currency share has decreased as the euro and yen have gained recognition, the greenback continues to be the most generally used reserve currency, adopted by the euro, the yen, the pound and the yuan.
The potential impression of a new BRICS currency on the US greenback stays unsure, with specialists debating its potential to problem the greenback’s dominance. However, if a new BRICS currency was to stabilize towards the greenback, it may weaken the energy of US sanctions, resulting in a additional decline in the greenback’s worth. It may additionally trigger an financial disaster affecting American households. Aside from that, this new currency may speed up the development towards de-dollarization.
Nations worldwide are in search of alternate options to the US greenback, with examples being China and Russia trading of their own currencies, and international locations like India, Kenya and Malaysia advocating for de-dollarization or signing agreements with different nations to trade in native currencies or various benchmarks.
While it’s unclear whether or not a new BRICS currency would encourage the creation of different US greenback alternate options, the risk of difficult the greenback’s dominance as a reserve currency stays. And as international locations proceed to diversify their reserve holdings, the US greenback may face growing competitors from rising currencies, probably altering the stability of energy in world markets.
However, a research by the Atlantic Council’s GeoEconomics Center launched in June 2024 exhibits that the US greenback is much from being dethroned as the world’s main reserve currency.
“The group’s ‘Dollar Dominance Monitor’ said the dollar continued to dominate foreign reserve holdings, trade invoicing, and currency transactions globally and its role as the primary global reserve currency was secure in the near and medium term,” Reuters reported.
Warwick J. McKibbin and Marcus Noland of the Peterson Institute for International Economics agree with this sentiment, writing of their evaluation of the impacts of US tariffs on BRICS nations that “the BRICS pose no serious threat to the dollar’s dominance.”
Ultimately, the impression of a new BRICS currency on the US greenback will rely on its adoption, its perceived stability and the extent to which it may possibly offer a viable various to the greenback’s longstanding hegemony.
Will BRICS have a digital currency?
BRICS nations don’t as of but have their own particular digital currency, however a BRICS blockchain-based cost system is in the works, in keeping with Kremlin aide Yury Ushakov in March 2024. Known as the BRICS Bridge multisided cost platform, it could join member states’ financial systems utilizing cost gateways for settlements in central bank digital currencies.
The deliberate system would function an various to the present worldwide cross-border cost platform, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, which is dominated by US {dollars}.
“We believe that creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain. The main thing is to make sure it is convenient for governments, common people and businesses, as well as cost-effective and free of politics,” Ushakov mentioned in an interview with Russian news company TASS.
Another dollar-alternative digital currency cross-border cost system in the works is Project mBridge, below development by way of a collaboration between the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China and the Central Bank of the UAE. Saudi Arabia has additionally just lately determined to affix the project. The central bank digital currencies traded on the platform can be backed by gold and native currencies minted in member nations.
In June 2024, Forbes reported that the mBridge platform had reached a important milestone by finishing its minimal viable product stage (MVP). The MVP platform can undertake real-value transactions (subject to jurisdictional preparedness) and is suitable with the Ethereum Virtual Machine (EVM), a decentralized digital atmosphere that executes code persistently and securely throughout all Ethereum nodes,” stated the publication. “MVP thus is appropriate as a testbed for new use circumstances and interoperability with different platforms.”
In a current interview with the Investing News Network, Andy Schectman, president of Miles Franklin, defined how Project mBridge pertains to the BRICS Unit.
“(New Development Bank President Dilma Rousseff) came out and publicly said that there has been an agreement in principle to use a new settlement currency called the Unit, which will be backed 40 percent by gold and 60 percent by the local currencies in the BRICS union — the BRICS+ countries. That gold will be in the form of kilo bars and will be deliverable or redeemable for those entities,” Schectman mentioned.
“The basket of gold and the basket of currencies will be minted in the member countries … it will be put into an escrow account, taken off the ledger so to speak — off of their balance sheet and put onto the mBridge ledger, and held in an escrow account in their own borders. It doesn’t need to be sent to a central authority.”
Andy Schectman of @MilesFranklinCo shares his up to date ideas on de-dollarization, going into element about Project mBridge, …
– YouTube
How would a BRICS currency impression the financial system?
A possible shift towards a new BRICS currency may have important implications for the North American financial system and buyers working within it. Some of the most affected sectors and industries would come with:
A new BRICS currency would additionally introduce new trading pairs, alter currency correlations and increase market volatility, requiring buyers to adapt their methods accordingly.
How can buyers put together for a new BRICS currency?
Adjusting a portfolio in response to rising BRICS currency trends could also be a problem for buyers. While it doesn’t at present seem to be a BRICS currency is on the rapid horizon, Trump’s aggressive trade ways have pushed allies away from the US, making diversification important.
Several methods might be adopted to capitalize on these trends and diversify your portfolio:
Prudent buyers can even weigh these methods towards their publicity to market, political and currency fluctuations.
In phrases of investment autos, buyers may think about ETFs equivalent to the iShares MSCI BIC ETF (ARCA:BKF) or the Pacer Emerging Markets Cash COW 100 ETF (NASDAQ:ECOW). They may additionally invest in mutual funds equivalent to the T. Rowe Price Emerging Markets Equity Fund, or in particular person firms within the BRICS international locations.
Simply put, making ready for a new BRICS currency or potential de-dollarization requires cautious analysis and due diligence by buyers. Diversifying currency publicity, and investing in commodities, equity markets or various investments are attainable choices to think about whereas being mindful of the related dangers.
Investor takeaway
While it isn’t sure whether or not the creation of a BRICS reserve currency will come to go, its emergence would pose important implications for the world financial system and probably problem the US greenback’s dominance as the main reserve currency. This development would current distinctive investment alternatives, whereas introducing dangers to present investments as the shifting panorama alters financial coverage and exacerbates geopolitical tensions.
For these causes, buyers ought to intently monitor the progress of a attainable BRICS currency. And, if the bloc does ultimately create one, it is going to be important watch the currency’s impression on BRICS member economies and the broader world market. Staying vigilant will help buyers to capitalize on growth prospects and hedge towards potential dangers.
FAQs for a new BRICS currency
Is a BRICS currency attainable?
Some financial analysts level to the creation of the euro in 1999 as proof that a BRICS currency could also be attainable. However, this may require years of preparation, the institution of a new central bank and an settlement between the 5 nations to part out their own sovereign currencies; it could most probably additionally need the help of the International Monetary Fund to achieve success internationally.
The impression of its conflict on Ukraine will proceed to weaken Russia’s financial system and the worth of the ruble, and China is intent on raising the energy of the yuan internationally. There can also be a extensive chasm of financial disparity between China and different BRICS nations. These are no small obstacles to beat.
Would a new BRICS currency be backed by gold?
While Russian President Vladimir Putin has urged arduous belongings equivalent to gold or oil, a new BRICS currency would probably be backed by a basket of the bloc’s currencies. However, this basket may probably comprise gold as effectively, as Andy Schectman defined to INN.
Additionally, talking at this 12 months’s New Orleans Investment Conference, well-known creator Jim Rickards gave a detailed discuss on how a gold-backed BRICS currency may work. He urged that if a BRICS currency unit is price 1 ounce of gold and the gold price goes to US$3,000 per ounce, the BRICS currency unit can be price US$3,000, whereas the greenback would lose worth in comparison with the BRICS currency as measured by the weight of gold.
Importantly although, he would not see this as a new gold commonplace, or the finish of the US greenback or the euro.
“(With) a real gold standard, you can take the currency and go to any one of the central banks and get some gold,” Rickards mentioned at the occasion. “With BRICS they don’t need to own any gold, they don’t need to buy any gold, they don’t need to prop up the price. They can simply rise on the greenback gold market.”
How a lot gold do the BRICS nations have?
As of Q3 2024, the mixed central bank gold holdings of the authentic BRICS nations plus Egypt (the solely nation of the 5 new additions to have central bank gold reserves) accounted for more than 20 p.c of all the gold held in the world’s central banks. Russia, India and China rank in the high 10 for central bank gold holdings.
Russia controls 2,335.85 metric tons (MT) of the yellow steel, making it the fifth largest for central bank gold reserves. China follows in the sixth spot with 2,264.32 MT of gold and India locations eighth with 853.63 MT. Brazil and South Africa’s central bank gold holdings are a lot smaller, coming in at 129.65 MT and 125.44 MT, respectively. New BRICS member Egypt’s gold holdings are equally small, at 126.82 MT.
This is an up to date model of an article initially printed by the Investing News Network in 2023.
Don’t overlook to comply with us @INN_Resource for real-time news updates!
Securities Disclosure: I, Melissa Pistilli, maintain no direct investment curiosity in any company talked about on this article.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
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