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NEW DELHI. – The BRICS alliance plans to launch a new currency backed by gold, reported RT News a month ahead of the summit.
Russia has reportedly briefed the bloc on the importance of pegging the soon-to-be-released currency to gold. The move could make it easier to take on the US dollar and challenge its global reserve status. The next BRICS summit will be held in South Africa in August and the formation of a new currency will be laid out.
The yet-to-be-launched BRICS currency could be backed by gold and the bloc of five nations are stockpiling the precious metal. In the last 18 months, the BRICS nations have increased their gold buying expenditure to end reliance on the US dollar.
The World Gold Council published a report saying that China purchased 102 tonnes of gold. Russia has purchased 31,1 tonnes of precious metal in the last six months. In addition, India added 2,8 tonnes to its gold reserves in 2023, for the first time in more than a year. India accumulated gold for several months and could add more by the end of the year.
The move puts the US dollar in jeopardy as gold could be used as collateral and not the USD. The BRICS alliance could rely more on gold and completely end reliance on the US dollar. If many more countries join the bloc, the new BRICS currency could be the preferred choice for cross-border transactions.
Robert Kiyosaki, the author of the best-selling personal finance book “Rich Dad Poor Dad” predicted that the US dollar “will die” if BRICS launch their new currency. The author-turned-analyst forecast that if BRICS back their currency with gold, the US dollar could begin to decline globally.
Moreover, the launch of a new currency is challenging as India hinted that it will take part in the formation. India’s Foreign Minister S Jaishankar hinted that India wants to strengthen its native currency, the Rupee, and not other currencies.
Gold is considered a safe investment and has a slim chance of collapsing than the US dollar. The greenback is now a risky asset as it comes with the dangers of debt.
If the debt ceiling crisis worsens, it could cause a domino effect of financial problems in developing countries. Therefore, a handful of countries in Asia, Africa, Latin America, and Europe, are looking to stay away from the US.dollar for global settlements.
The US sanctions pressed against Russia are helping India and other developing countries to purchase crude oil at discounted prices. The Biden administration sanctioned Russia over its conflict with Ukraine.
The sanctions stop other countries from conducting business with Russia in a move to disable its local economy. Other countries are not allowed to settle payments with Russia using the US dollar for cross-border transactions. The recent oil deal was carried out between Russia, China, and India.
However, despite the sanctions, Russia is selling crude oil to China and Saudi Arabia by accepting the Chinese yuan as payment. Saudi Arabia and China are selling Russian crude oil to other countries at discounted prices due to the sanctions. The reliance on the US dollar is eliminated in these transactions, making it cheaper for other nations to procure oil.
Since February 2022, India purchased US$186.45 billion worth of crude oil from Russian suppliers.
India has saved US$7,37 billion through these transactions, as paying in the US dollar could have cost US$193,82 billion. In addition, the US$7,37 billion was saved by India through foreign exchanges in 14 months.
Also, Russia is finding alternate ways to conduct business with global partners without depending on the US dollar. The BRICS group is helping the Russian economy to sustain itself by conducting business with the Chinese yuan. – Watcher.guru
Online Reporter