BRICS is a conglomeration of the world’s most persuasive countries, namely Brazil, Russia, India, China, and South Africa. Collectively, they hold a massive GDP of $26 trillion, which is about 31% of the global GDP. The biggest contribution is China, standing at a GDP of $16.86 trillion, followed by India, Brazil, Russia, and South Africa, respectively.
Not only the geopolitical influence of BRICS is increasing exponentially, but also it has surpassed the G7 countries in 2020 in terms of economy. The convergence of GDP growth rate happened at 31%; afterward, the Gap is burgeoning, and the latest statistics show that the BRICS nation is leading with a 33.6% of growth rate while G7 countries are at 27.8%.
The dramatic paradigm shift is changing the global geopolitical dimensions, and a tectonic shift is taking place. Clearly, it is an indication of multilateralism or multipolarity; as it has been already noticed and highlighted. The global scenario is rapidly being transformed, where the interests of the countries are being realigned worldwide.
BRICS vs Dollar’s Hegemony:
After the end of WW2, the Bretton Woods institutions were formalized, which helped the US to maintain dollar supremacy in the global world. Since then the USD is ruling the world despite massive international shocks such as International Financial Crisis (2008-2009). However, the Covid-19 was proved a pivotal event, which compel influential countries to rethink their roles on the global stage.
Now, the BRICS nation is considering launching their currency, as a replacement for the dollar, for use as the purpose of International trade. Definitely, the process of de-dollarization is in the pipeline, and the BRICS nations are in the capacity to do so owing to their giant economy size.
Hurdles for BRICS nations to introduce their currency:
Having a common currency is not a unique concept, there are examples exist that indicate the possibility of introducing a new and common currency. For example, European countries after forming the European Union (EU) also launched their own currency “Euro” — which is globally powerful and recognized. However, it would be not easy for the BRICS nation for having a common currency because of several underlying factors:
If one reason which could be considered as most significant is geopolitical issues between countries. China and India are arch-rivals in Asia and also have ongoing border disputes. China’s growing influence in Asia and the Indian Ocean could be taken as a threat to Indian interests by India. However, in the recent trend, we have seen that India is showing neutrality esp. concerning the US-China rivalry, but the historical factors of enmity and clashes cannot be ignored.
It has been evident that the growing economic power of China is a vital threat to US long-term interest, and the USA is deemed to follow any path to protect its interest. However, China is already too ahead of the USA as it is successfully maneuvering in the geopolitical domain. For example, the recent proximity of Saudi Arabia to Iran is the manifestation of China’s efforts, which indicates China’s own version of alignment in the Middle East.
So, it is clear that the persuasive role of China is very hard to digest by the USA, and the United States would persistently force its own interest in the world. Therefore, the direct or indirect role of the USA would always be there to maintain its dollar’s hegemony.
Forming a new global currency is not an easy task. Some economic characteristics must be held by the currency. For example, the exchange rate, interest rate, and liquidity are some factors that are linked to any currency.
Suppose, the currency has been introduced but the trade on the global scale is not being functionalized under the newly developed currency, it would have to face its death. Moreover, not just the trade matters, but also the flow of the currency in the financial market is much more decisive. Therefore, it is necessary to evaluate all the facts before directly coming to a conclusion of feasibility.