At the BRICS Summit in South Africa, Luiz Inacio Lula da Silva proposed the formation of a common currency for the nations.
The president cited concerns over the region’s vulnerability to the US dollar and volatility in exchange rates. It’s a proposition that wasn’t thought to be a discussion point for the summit, which comes amid a backdrop of global tension and an economic back and forth.
Whilst other countries in the BRICS grouping have been less receptive to the idea, the current economic climate may well fuel interest in exploring a currency less pegged against the volatility of exchange rates.
Previously, the Indian premiership has poured water on the idea of a currency, however, other regions have shown they could be allured by the prospect of a digital unified currency.
Economic back turbulence between the BRICS nations and the western world was intensified off the back of Russia’s invasion of Ukraine and the west’s subsequent condemnation of Russia, which led to economic isolation for the region.
Addressing the Summit via a video link, Lula da Silva emphasised his belief that the process of shifting away from the dollar is something that is ‘irreversible’, adding that he feels that it’s ‘gaining pace’. Putin was unable to attend the conference in person over travel restrictions.
It’s a move that Russia could likely be swayed by, as the country looks to alter the economic landscape and strengthen its position economically.
In terms of avenues that the BRICS economies could pursue in terms of a new currency, with stablecoins growing it could be something that is explored in order to ensure stability to a new currency for the global grouping.