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The Brics group of nations will discuss the feasibility of introducing a common currency, according to the foreign minister of South Africa, which is preparing to host a summit of the bloc’s leaders.
US interest-rate hikes and geopolitical conflicts have pushed up the value of the American currency and all the commodities priced in it, to the detriment of most emerging markets.
That spurred calls for alternatives to using the greenback as the global trading currency.
One option is for the Brics bloc — which comprises Brazil, Russia, India, China and South Africa — to adopt their own unit. The issue is likely to be on the agenda of a meeting of the nations’ heads of state in Johannesburg on August 22.
“It’s a matter we must discuss and discuss properly,” South African Minister of International Relations and Cooperation Naledi Pandor said in an interview in Cape Town on Tuesday.
She said that without seeking to preempt the discussions, “I don’t think we should always assume the idea will work, because economics is very difficult and you have to have regard to all countries, especially in a situation of low growth when you are emerging from crises.”
Brics represents more than 40 percent of the world’s population and almost a third of global economic output, making it one of the world’s most important economic blocs.
Several other nations, including Saudi Arabia and Iran, have expressed an interest in joining its ranks.
The discussion about a common currency for the bloc has been generated by Brics and other nations questioning why they can’t use their own currencies, instead of the US dollar, to trade, Pandor said.
Any move toward the creation of a single form of legal tender would spur other debates about the creation of a single central bank and where it would be situated, said South African Reserve Bank Governor Lesetja Kganyago. – Bloomberg
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