Many recent reports show that the new BRICS currency may be backed by gold, not USD or other currencies.
BRICS is aiming to launch a new currency backed by gold to compete with the USD. The bloc's common currency will help BRICS open a new financial era and become the foundation for the stronger development of this group of developing countries.
Many recent reports show that the new BRICS currency may be backed by gold, not USD or other currencies. This bloc aims to return to the gold standard and maintain a multipolar world for all trade and transaction activities.
The World Gold Council (WGC) said BRICS countries are the largest buyers of gold since 2022 and are accumulating tons of this precious metal in reserves.
Economist Thorsten Polleit said that BRICS' creation of a gold-backed currency would "storm" the financial market. “A new internationally traded currency, backed by gold, appears to be the one they have in store,” he pointed out. And this is also a big challenge to the dominance of the USD.”
China is still the largest "investor" in gold in the bloc. WGC said China is encouraging other BRICS countries to buy this precious metal for reserves, not USD. In just the past 18 months, China has held more than 300 tons of gold worth $561 billion.
The BRICS gold-backed common currency could be a “game changer” in financial markets and could be detrimental to the USD. Recently, developing countries have tended to shy away from the USD and use alternatives for cross-border transactions. Accordingly, this step forward with the new currency will further strengthen the position of BRICS and other emerging economies, leaving the USD far behind.
The upcoming summit held in October will clarify BRICS' plans in the de-dollarization process.
The launch of the new currency is part of BRICS' efforts to avoid sanctions from the West and increase the profits of the oil sector. With efforts to accumulate gold and produce oil, BRICS' de-dollarization plan has shown effectiveness this year.
Compared to other global currencies, the value and reputation of the USD has somewhat decreased. As BRICS gains more members and receives great attention, more and more countries around the world are working to switch to a new global reserve currency, other than the greenback.
If BRICS and other countries stop using the greenback, the US economy could enter a period of hyperinflation. Prices of essential goods could skyrocket, while wages across the country remain stagnant. Furthermore, it is possible that a series of staff cuts will take place as businesses face pressure on operating costs.
However, a newly released report by the Center for Geoeconomics of the Atlantic Council shows that the USD still ranks first in foreign exchange reserves, trade payments and currency transactions globally. This currency's role as a global reserve currency is still guaranteed in the short and medium term.
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