At the upcoming BRICS summit in Johannesburg, experts are predicting that the leaders of Brazil, Russia, India, China, and South Africa will agree to launch a digital fiat for the bloc. According to key analysts, this ambitious project could debut within the next five to ten years.
Evandro Caciano, the head of foreign exchange at Trace Finance, noted that the BRICS nations “should leave the meeting with working groups established on the matter,” indicating a strong possibility for future collaboration. He emphasized the need for countries to align on key strategies, stating that smaller technical groups would take charge of navigating the complexities of a shared digital currency.
Investment analyst Milena Araújo, of Nexgen, was equally optimistic. She expects discussions at the summit, scheduled from August 22-24, to revolve around crafting a concrete feasibility plan for the digital currency. Araújo pointed out that a successful proposal could set the stage for a shared digital coin, potentially issued by the BRICS Development Bank.
Why BRICS Nations are Eager for a Digital Currency
Experts like Caciano believe that the current global economic climate is conducive to launching a BRICS digital coin, particularly given the economic challenges faced by the United States. Brazilian President Luiz Inacio Lula da Silva has openly supported the concept of a common currency, arguing that it would strengthen trade between BRICS nations and reduce dependence on the US dollar.
In fact, BRICS nations have been actively discussing the launch of a digital token since 2019. Countries like China, Brazil, and Russia have made strides in developing their own Central Bank Digital Currencies (CBDCs), such as the digital yuan, DREX, and the digital ruble. There is even talk of conducting cross-border trades using these digital currencies, further boosting economic independence.
Will a BRICS CBDC Become a Reality?
While the idea of a BRICS digital currency has gained traction, not everyone is convinced. Lord Jim O’Neill, the former Goldman Sachs economist who coined the term BRICS, recently labeled the idea of a shared currency as “ridiculous.” He questioned how a BRICS central bank could be formed, calling the notion “embarrassing.”
South African officials have downplayed the likelihood of a common currency being on the summit’s agenda. Nonetheless, discussions about a shared digital currency have taken place at previous summits, indicating that this topic remains a priority for member nations.
As the 15th BRICS summit approaches, leaders will not only discuss the digital currency but also evaluate membership applications from nearly two dozen countries, including Venezuela, Vietnam, Indonesia, Saudi Arabia, Iran, Argentina, and others. The potential for BRICS expansion could play a crucial role in shaping the future of global trade and finance.
