The BRICS bloc is making waves in the global financial landscape by reportedly selecting gold as the cornerstone of its new payment system, further challenging the U.S. dollar’s long-held supremacy. As this coalition of emerging economies—comprising Brazil, Russia, India, China, and South Africa—continues to stockpile gold, it is positioning itself to shift away from the greenback, signaling a significant turning point in international finance.
A Strategic Shift Towards De-Dollarization
Over the past year, BRICS has firmly embraced a de-dollarization strategy, seeking to reduce global reliance on Western financial systems. As it pursues a more prominent role in global economics, the bloc is exploring the introduction of a new currency that could rival the dollar’s dominance. This strategic shift reflects a broader desire among member nations to establish a more balanced and multipolar economic landscape.
At the upcoming 2024 summit, the BRICS bloc is expected to unveil a groundbreaking blockchain-based payment system. Discussions are underway regarding the potential launch of a native trade currency, signaling a bold step toward enhancing economic collaboration among member states. Notably, gold is set to play a pivotal role in this initiative, with reports indicating that it will comprise 40% of a common unit of account, while the remaining 60% will consist of various BRICS currencies.
Gold as a Universal Instrument
Audrey Mikhailishin, head of the BRICS Business Council task force on Financial Services, recently emphasized gold’s significance in this new payment framework. She described the metal as a “convenient and universal instrument,” highlighting its liquidity and versatility in facilitating trade among member countries. “When you have a unit of account that can be converted into any national currency, it is more convenient for you to hold it,” she stated. This innovative approach could prove critical as the BRICS bloc seeks to boost competition with the dollar.
The U.S. dollar has held a dominant position in global finance since the Bretton Woods Agreement of 1944, effectively replacing gold as the primary reserve currency. However, as more countries gravitate towards gold, the potential for increased competition is on the horizon. In 2024, gold prices have soared, reaching several all-time highs, while the dollar’s relevance has waned. The Atlantic Council’s Dollar Dominance Meter reveals that the greenback has lost 14% of its global reserve share since 2002, a trend that is unlikely to reverse as BRICS strengthens its economic initiatives.
Also Read: 40 Countries Eye BRICS Membership In 2024 – A New Era For De-Dollarization Begins!
A New Era of Economic Collaboration
The BRICS bloc’s move to integrate gold into its payment system marks a pivotal moment in the evolution of global finance. As the coalition continues to expand, it is set to reshape the dynamics of international trade and currency reliance. With a focus on reducing dependence on the U.S. dollar, the BRICS nations are not just diversifying their economic strategies; they are also challenging the status quo.
As the 2024 summit approaches, the world watches closely. Will this bold move pave the way for a new era of economic collaboration among emerging markets, or will the U.S. dollar maintain its reign despite the challenges? One thing is clear: the BRICS bloc is determined to carve out its place in the global financial system, and gold is at the forefront of this ambitious plan.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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