The bloc of emerging market nations known as BRICS which currently includes Brazil, Russia, India, China, and South Africa, is expanding its membership for the first time since 2010.
A key part of BRICS’ strategy is the Shanghai-based New Development Bank, which has $50 billion in subscribed capital and plans to add several new emerging market member countries this year in a bid to expand its lending capability.
Already, in addition to the core BRICS countries, the bank includes Bangladesh and the United Arab Emirates among its members. Uruguay is in the process of joining and Saudi Arabia has applied as well.
What will happen if this planned macro currency hits the open market? How will the EURO and USD react?
The “Petrodollar” that has been valid since 1974 after an agreement between Richard Nixon and Crown of Saudi Arabia, to only value sale of crude oil in USD, can soon be forgotten.
A massive effort by Saudi Arabia to invest in the US is going on right now, this could later be a disaster for the domestic currency, if the BRICS face the $ currency. Europe will also feel this economic change if the USD falls, specially if the US stock market will react negative.
“The objective, irreversible process of de-dollarization of our economic ties is gaining momentum,” Putin told the last BRICS summit.
However, the dollar still dominates global trade. It is on one side of almost 90% of global forex transactions, according to Bank of International Settlements Data.
De-dollarizing would need countless exporters and importers, as well as borrowers, lenders and currency traders across the world, to independently decide to use other currencies.
Finally, all this commotion is difficult to judge whether it will become a reality of a currency in the BRICS group. The world is facing a troubled year ahead, 2024, with economic difficulties and changes in the climate that can be caused by a variety of factors.
But certainly, positive factors will also happen in the next year.
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