BRICS Looking At Basing Financial Reserves On A Basket Of Their Own Currencies
Move will see US$162 billion of annual intra-BRICS trade settled in each other’s currencies as US dollar and Euro are dropped from use.
The BRICS countries are working on establishing a new reserve currency to better serve their economic interests, Pavel Knyazev, the Russian ambassador to the BRICS, part of Russia’s Foreign Ministry has stated this week. It will be based on a basket of the currencies of the five-nation bloc: Brazilian Real, Russian Ruble, Indian Rupee, Chinese RMB Yuan and South Africa’s Rand.
Knyazev said during a discussion about expanding BRICS and the Shanghai Cooperation Organization, that “The possibility and prospects of setting up a common single currency based on a basket of currencies of the BRICS countries is being discussed.” According to Knyazev, member states are “actively studying mechanisms” to exchange financial information to develop a reliable alternative for international payments.
In an effort to reduce reliance on the US Dollar and the Euro, the BRICS is set to build a joint financial infrastructure that will enable a reserve currency to be created. The group has been boosting economic ties, with trade turnover steadily growing despite restrictions brought on by the pandemic and conflict in Ukraine. Intra-BRICS trade reached US$162 billion in 2022.
The BRICS had previously said it was working on establishing a joint payment network to cut reliance on the Western financial system. The member countries have also been increasing the use of local currencies in mutual trade. Brazil and China signed an agreement earlier this week.