The American dollar has long enjoyed a prominent position in the world, one that has allowed the United States to retain its superpower status and to elevate the quality of life for her people.
Unfortunately, all of this preeminence and prosperity may be coming to a disturbingly unpleasant end.
The BRICS alliance, which consists of Brazil, Russia, India, China, and South Africa, is a group of nations that has assembled together. A newly emerging goal of the alliance is to move away from the US dollar and move towards the creation of a new global currency.
The ramifications of the BRICS coalition are profound, not only for America’s place on the international economic stage, but for the potential future of international relations.
Speaking at a recent economic event in New Delhi, India, Russian Deputy Chairman of the State Duma Alexander Babakov urged India and Russia to form a financial relationship that would include the establishment of a new common currency.
Babakov placed particular emphasis on the notion that both nations should work to obtain a new medium for facilitating payments.
“New Delhi, Moscow should institute a new economic association with a new shared currency, which could be a digital ruble or the Indian rupee,” Babakov said.
He also stressed that China would be a major player in developing a common currency for India, Russia, and China itself.
“New Delhi, Beijing and Moscow are the nations that now institute a multipolar world that is endorsed by the majority of governments,” the Russian official said.
He additionally emphasized the need for a new currency that does not rely on the US dollar or the euro.
“Its composition should be based on inducting new monetary ties established on a strategy that does not defend the US’s dollar or euro, but rather forms a new currency competent of benefiting our shared objectives,” he remarked.
Jim O’Neill, a British economist and a former chairman of Goldman Sachs Asset Management, is recognized for having coined the acronym BRIC, which initially stood for Brazil, Russia, India, and China. He used the term to describe rapidly growing economies that he felt would eventually dominate the global economy.
When South Africa was added in 2010, the set of initials was altered to read as BRICS.
The five BRICS nations have a combined area of 15,346,100 sq. miles (about 27% of the world’s land surface), and an estimated total population of about 3.2 billion (approximately 42% of the global population).
Russia, India, and China are included among the world’s largest countries by population, area, and GDP.
Since 2009, BRICS representatives have met annually at formal summits, where multilateral policies have been coordinated. China hosted the most recent BRICS summit in July of 2022. The next one is scheduled for this coming August.
In a paper that was published in the Global Policy journal in late March of 2023, O’Neill, urged the BRICS bloc to challenge the US dollar’s dominance. He stated that “the U.S. dollar plays a far too dominant role in global finance.”
The effect of the BRICS alliance on international finance and geopolitics is yet to be determined. However, it is clear that the current BRICS nations are attempting to position themselves as an alternative model to the G7.
The G7 is comprised of the world’s most advanced economies, including the United States, Germany, France, the United Kingdom, Italy, Japan, Canada, and the EU.
As a likely consequence of the war in Ukraine, the BRICS countries have distanced themselves from the efforts of the United States and its allies to aid Ukraine. BRICS nations have refused to take part in any of the sanctions against Russia.
Many European and US policymakers are rightly concerned that this group of nations may become less of an economically-oriented institution and more of a geopolitical alliance.
In 2014, with $50 billion in seed money, the BRICS nations launched the New Development Bank as an alternative to the World Bank and the International Monetary Fund. They additionally created a liquidity mechanism called the “Contingent Reserve Arrangement” to assist member states with payments.
The alternatives appear to be attractive to many other developing and emerging economies, and a large number of them have expressed interest in joining.
The BRICS bank has brought in new member nations. In 2021, Egypt, the United Arab Emirates, Uruguay, and Bangladesh became shareholders.
Worldwide interest from other nations in joining the BRICS group is on the rise. The bloc is formulating criteria for new member states and may decide by the end of this year on whether to admit some additional countries.
South Africa is the 2023 chair of BRICS, and South African Foreign Minister Naledi Pandor recently revealed that a number of countries have approached the previous chair, China, about joining.
“The world is changing in very worrying ways. Countries are searching for like-minded partners around the world,” Pandor said at a press conference in Johannesburg.
“Many countries are finding that the approach of BRICS is one [in which] they would like to take part,” she added.
Reportedly, the list of potential new BRICS members includes Saudi Arabia, the United Arab Emirates, Egypt, Algeria, Argentina, Mexico, and Nigeria. By brokering a peace deal between Saudi Arabia and Iran, China paved the way for both nations to join BRICS.
A multipolar economic order seems to be advancing quickly, which is expected to have serious implications for America.
If the US dollar loses its position as the reserve currency of the world, this would mean a loss of more than just economic power and influence.
A new global currency could make it even more difficult for the US to enforce sanctions, which it uses regularly as an alternative to military action.
A global shift away from the US dollar may lead to far less geopolitical power for the United States.
It may also constitute a grave threat to the geopolitical stability the world has experienced up until now.