What Is BRICS Currency? Understanding the Potential Impact

What Is Brics Currency? Delve into the potential of a new reserve currency backed by BRICS nations, exploring its implications for the global economy and the US dollar. WHAT.EDU.VN provides you with a comprehensive analysis, offering insights into de-dollarization, alternative financial systems, and currency diversification strategies. Discover how this initiative could reshape international finance and what it means for you with potential currency alternatives and geopolitical impacts.

1. Why Do the BRICS Nations Want to Create a New Currency?

The BRICS nations, comprising Brazil, Russia, India, China, and South Africa, alongside newer members like Egypt, Ethiopia, Iran, Indonesia, and the United Arab Emirates, are driven by several compelling reasons to explore creating a new currency. These motivations stem from recent global financial challenges and perceived aggressive US foreign policies. Fundamentally, the BRICS nations aim to better serve their own economic interests while simultaneously reducing global dependence on the US dollar and the euro.

Alt text: BRICS nations flags representing the desire to establish a new currency.

One of the primary catalysts for this push toward a new currency is the imposition of numerous sanctions by the US on countries like Russia and Iran. According to Iranian Ambassador to Russia, Kazem Jalal, speaking at a press conference during the Russia–Islamic World: KazanForum in May 2024, these two countries are actively collaborating to bring about a BRICS currency that would negate the economic impacts of such restrictions. This currency would provide a mechanism to bypass US-led financial systems, enabling these nations to continue trade and economic activities without fear of sanctions.

However, not everyone agrees that a BRICS currency is a sound idea. Some experts, such as those cited in a Financial Times report, believe that a BRICS currency is a flawed concept because it would attempt to unite countries with vastly different economies. There are also concerns that non-Chinese members might increase their dependence on China’s yuan instead. The economic disparity and differing national interests present significant challenges to creating a unified currency that benefits all members equally.

Despite these challenges, the BRICS nations continue to explore alternatives to the US dollar. In October 2023, Russia’s demand that India pay for oil in yuan, as Russia struggled to use its excess supply of rupees, was met with resistance. India insisted on using either the US dollar or rupees for payment, highlighting the complexities of transitioning away from established currencies.

2. When Will a BRICS Currency Be Released?

As of now, there is no definitive launch date for a BRICS currency. However, the leaders of the member nations have engaged in extensive discussions about the possibility.

Looking back at the timeline of BRICS currency discussions, during the 14th BRICS Summit held in mid-2022, Russian President Vladimir Putin announced that the BRICS countries were planning to issue a “new global reserve currency” and were ready to collaborate openly with all fair trade partners.

Alt text: Leaders at a BRICS summit engaging in currency discussions

In April 2023, Brazilian President Luiz Inacio Lula da Silva voiced his support for a BRICS currency, questioning why an institution like the BRICS bank couldn’t have a currency to finance trade relations among BRICS countries. He challenged the notion that the US dollar should be the default trade currency after the end of gold parity.

In the lead-up to the 2023 BRICS Summit, there was speculation that an announcement regarding the new currency might be made. However, these expectations were not met. Leslie Maasdorp, CFO of the New Development Bank, which represents the BRICS bloc, stated that the development of any alternative currency was a medium to long-term ambition, and there were no immediate plans to create a BRICS currency.

More recently, Brazilian government officials, who assumed the rotating presidency of the BRICS group for 2025, have indicated that there are no plans to take significant steps toward launching a BRICS currency. Nonetheless, measures aimed at reducing reliance on the US dollar are still very much on the agenda. Cross-border payment systems, including exploring blockchain technology, are expected to be a major theme at the 2025 BRICS summit in Rio de Janeiro, according to a Reuters report.

2.1 Factors Influencing the Timeline

1. Geopolitical Factors: The ongoing tensions and shifts in global alliances can either accelerate or delay the push for a BRICS currency.

2. Economic Stability: The economic health and stability of member nations play a crucial role in the feasibility of launching a new currency.

3. Technological Advancements: The adoption and integration of blockchain and digital technologies are essential for facilitating cross-border transactions.

3. Which Nations Are Members of BRICS?

As of 2025, the BRICS alliance consists of 10 member nations: Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates.

Initially, the group was composed of Brazil, Russia, India, and China, and was referred to as BRIC. The name was changed to BRICS when South Africa joined in 2010.

At the 2023 BRICS Summit, six additional countries were invited to become members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE). However, Argentina and Saudi Arabia did not officially join the alliance in January 2024. Indonesia became the 10th full member of BRICS in 2025.

Furthermore, at the 2024 BRICS Summit, 13 nations signed on as BRICS partner countries, although they are not yet full members. These countries include Algeria, Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Vietnam, and Uzbekistan.

The expanded group of 10 full member countries is sometimes referred to as BRICS+, although the official name of BRICS has not been changed.

Alt text: Map showing the BRICS member nations and potential member countries

3.1 Expansion of BRICS

1. Economic Influence: The expansion of BRICS is aimed at increasing the economic influence and bargaining power of the alliance on the global stage.

2. Geopolitical Strategy: The inclusion of new members aligns with the geopolitical strategy of creating a more balanced and multipolar world order.

3. Resource Diversification: The addition of countries with diverse resources and economic strengths contributes to the overall resilience of the BRICS alliance.

4. What Would the Advantages of a BRICS Currency Be?

A new currency could offer several benefits for the BRICS countries, including more efficient cross-border transactions and increased financial inclusion. By leveraging blockchain technology, digital currencies, and smart contracts, the currency could revolutionize the global financial system. Thanks to seamless cross-border payments, it could also promote trade and economic integration among the BRICS nations and beyond.

4.1 Key Advantages

1. Economic Integration: A BRICS currency would strengthen economic integration within the BRICS countries by reducing transaction costs and facilitating trade.

2. Reduced US Influence: It would diminish the influence of the US on the global stage by providing an alternative to the US dollar in international transactions.

3. Weakened Dollar Hegemony: A BRICS currency could weaken the standing of the US dollar as a global reserve currency, leading to a more balanced financial system.

4. Encouraged Regional Alliances: It might encourage other countries to form alliances and develop regional currencies, fostering greater economic independence.

5. Mitigated Global Risks: The currency could mitigate risks associated with global volatility by reducing dependence on the US dollar and promoting stability.

5. What Is Donald Trump’s Stance on a BRICS Currency?

Former US President Donald Trump has been vocal about his stance on a BRICS currency, particularly regarding its potential impact on American economic interests. He has consistently advocated for American protectionism and has threatened to impose significant tariffs on countries that seek to move away from the US dollar as the global currency.

During the first US Presidential Debate between him and Vice President Kamala Harris, Trump reiterated his pledge to punish BRICS nations with strict tariffs if they attempt to undermine the US dollar’s dominance.

5.1 Trump’s Trade Policies

1. Threat of Tariffs: Trump has threatened to impose tariffs ranging from 60 percent to 100 percent on Chinese imports, although these tariffs would primarily be paid by American companies and consumers.

2. Social Media Warnings: In early December, Trump posted a direct threat to BRICS nations on Truth Social, stating that they would face 100 percent tariffs if they created a new currency to replace the US dollar.

3. Kremlin’s Response: In response to Trump’s demands, Kremlin spokesperson Dmitry Peskov indicated that the trend of switching to national currencies in international trade would continue, regardless of US pressure.

6. How Will Trump’s Tariffs Affect BRICS Nations?

If Trump were to implement 100 percent tariffs on BRICS nations, the outcome could be costly for all parties involved. According to an analysis by the Peterson Institute for International Economics, such actions would result in slower growth and higher inflation in the US and most of the targeted economies.

6.1 Impact on BRICS Economies

1. China’s Economic Slowdown: China, as the United States’ largest trading partner, would likely experience the most significant slowdown in GDP growth.

2. Steel and Aluminum Tariffs: Trump’s 25 percent tariff on steel and aluminum imports would impact Brazil, China, and the UAE, as they are major sources of these materials for the US.

3. Inflationary Pressures: The imposition of tariffs could lead to increased inflationary pressures within the BRICS nations, affecting consumer prices and economic stability.

7. How Would a New BRICS Currency Affect the US Dollar?

Alt text: Graph showing the international role of the US dollar

For decades, the US dollar has been the world’s leading reserve currency. According to the US Federal Reserve, the dollar was used in a significant percentage of international trade invoicing across the Americas, Asia-Pacific, and the rest of the world between 1999 and 2019.

The US dollar is also used in a substantial portion of currency exchanges and foreign currency reserves held by central banks. Its status as the most widely used currency for conversion makes it essential for almost all central banks worldwide. Additionally, the dollar is used for the vast majority of oil trades.

Although the dollar’s reserve currency share has decreased as the euro and yen have gained popularity, it remains the most widely used reserve currency.

The potential impact of a new BRICS currency on the US dollar remains uncertain, with experts debating its ability to challenge the dollar’s dominance. If a new BRICS currency were to stabilize against the dollar, it could weaken the power of US sanctions and lead to a further decline in the dollar’s value. It could also cause an economic crisis affecting American households and accelerate the trend toward de-dollarization.

7.1 De-Dollarization Trends

1. Alternative Trading Arrangements: Nations worldwide are seeking alternatives to the US dollar, such as China and Russia trading in their own currencies.

2. Local Currency Agreements: Countries like India, Kenya, and Malaysia are advocating for de-dollarization or signing agreements to trade in local currencies.

3. Emerging Currency Competition: As countries diversify their reserve holdings, the US dollar could face increasing competition from emerging currencies, potentially altering the balance of power in global markets.

8. Will BRICS Have a Digital Currency?

BRICS nations do not currently have their own specific digital currency. However, a BRICS blockchain-based payment system is in development, according to Kremlin aide Yury Ushakov. This system, known as the BRICS Bridge multisided payment platform, would connect member states’ financial systems using payment gateways for settlements in central bank digital currencies.

8.1 BRICS Bridge Payment System

1. Alternative to SWIFT: The planned system would serve as an alternative to the current international cross-border payment platform, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, which is dominated by US dollars.

2. Digital Technologies: The system would be based on state-of-the-art tools such as digital technologies and blockchain, making it convenient, cost-effective, and free of political influence.

3. Project mBridge: Another dollar-alternative digital currency cross-border payment system in the works is Project mBridge, under development via a collaboration between several financial authorities.

9. How Would a BRICS Currency Impact the Economy?

A potential shift toward a new BRICS currency could have significant implications for the North American economy and investors operating within it.

9.1 Affected Sectors

1. Oil and Gas: Changes in currency dynamics could affect the pricing and trade of oil and gas.

2. Banking and Finance: The financial sector could see shifts in currency valuations and investment flows.

3. Commodities: The value and trade of commodities could be influenced by the new currency.

4. International Trade: Trade relationships and agreements could be altered.

5. Technology: Technological advancements in payment systems and digital currencies could accelerate.

6. Tourism and Travel: Currency exchange rates could impact tourism and travel patterns.

7. Foreign Exchange Market: New trading pairs and currency correlations could increase market volatility.

10. How Can Investors Prepare for a New BRICS Currency?

Adjusting a portfolio in response to emerging BRICS currency trends may be a challenge for investors.

10.1 Investment Strategies

1. Currency Diversification: Invest in assets denominated in currencies other than the US dollar.

2. BRICS Equity Markets: Gain exposure to BRICS equity markets through stocks and ETFs that track BRICS market indexes.

3. Precious Metals: Invest in gold and silver as a hedge against currency risk.

4. Alternative Investments: Consider real estate or private equity in the BRICS countries.

5. Monitor Market Fluctuations: Be mindful of market, political, and currency fluctuations.

For those reasons, investors should closely monitor the progress of a possible BRICS currency. And, if the bloc does eventually create one, it will be important watch the currency’s impact on BRICS member economies and the broader global market. Staying vigilant will help investors to capitalize on growth prospects and hedge against potential risks.

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Alt text: Investment strategies for a new BRICS currency shown with gold bars and the US and China flags

FAQs for a New BRICS Currency

Is a BRICS Currency Possible?

Some financial analysts point to the creation of the euro in 1999 as evidence that a BRICS currency may be possible. However, this would require years of preparation, the establishment of a new central bank, and an agreement among the member nations to phase out their own sovereign currencies. The support of the International Monetary Fund would likely be necessary for international success.

Would a New BRICS Currency Be Backed by Gold?

While Russian President Vladimir Putin has suggested hard assets such as gold or oil, a new BRICS currency would likely be backed by a basket of the bloc’s currencies. This basket could potentially contain gold as well.

How Much Gold Do the BRICS Nations Have?

As of Q3 2024, the combined central bank gold holdings of the original BRICS nations plus Egypt accounted for more than 20 percent of all the gold held in the world’s central banks. Russia, India, and China rank in the top 10 for central bank gold holdings.

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