BRICS
CURRENCY – INTERNATIONAL
News:
Path to a BRICS currency
is challenging
What's
in the news?
● BRICS
expansion and common currency are the top of the agenda in 15th BRICS summit
held in South Africa.
Key
takeaways:
● The
bloc also issued a joint statement titled ‘The
Cape of Good Hope’, underscoring the use of local currencies in
international trade and financial transactions between BRICS and its trade
partners.
● The
BRICS represent 41% of the global population, 24% of the world’s GDP, and
conducts 16% of the world’s trade.
Origin
of BRICS Common Currency:
● Last
year, soon after the western sanctions on Russia for its Ukraine invasion,
Russia felt that the need for 'Alternative
Transfer Mechanism' and 'International reserved Currency' with reliable
partners like India, China and Other BRICS countries.
● The
idea for a common BRICS currency is based on the bloc’s aim to globally realign
the geopolitical situation to suit its member nations’ economic, geographic and
demographic advantages.
● Previously,
BRICS aimed to counter the West’s dominance in global financial institutions
like the World Bank or the International Monetary Fund.
● The
bloc, which was created in 2009, established the multilateral New Development Bank (NDB) in 2015 for mobilising
resources for infrastructure and projects in emerging markets and developing
countries via NDB (previously known as the BRICS Development Bank),
● This
BRICS Common Currency concept has come up at the time of India's various steps
regarding de-dollarization and rupee internationalisation efforts.
Concept
of BRICS Pay enables payment in local currency between BRICS countries:
● BRICS
PAY is a digital payments platform that is being jointly developed by the member countries of the BRICS (Brazil,
Russia, India, China, and South Africa) economic bloc.
● BRICS
PAY aims to enable digital payments
between the different countries in BRICS
PLUS format, allowing businesses and consumers to securely and seamlessly
make and receive payments in their local currency.
● The
platform is designed to reduce the cost and complexity of international
payments, as well as providing a secure and reliable way to pay for goods and
services.
Need
for BRICS Common Currency:
● To
avoid or bypass unilateral western
sanctions to protect the strategic autonomy and national interest.
● To
reduce the dominance of the US dollar
and push for local currency in global trade.
● To
increase the reliability of the
international payment system.
● To
reduce the cost and complexity of
the international payment system.
India's
stand:
● India
has denied any talks of a BRICS currency.
● India
has asserted that its focus is on strengthening its national currency and
promoting its trade with all global powers.
● RBI has allowed 18 countries to trade
in rupees with India - Botswana, Fiji, Germany, Guyana, Israel,
Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles,
Singapore, Sri Lanka, Tanzania, Uganda and the United Kingdom.
● Rupee Dirham deal
- It aims to interlink the two nations’ payment and messaging systems as well
as increase the circulation of the rupee in the Gulf region.
● Rupee
Rouble arrangement has already done by Russia and India, but later dropped due
to expensive currency conversion.