The group of emerging economies BRICS has made significant strides in the past two years in its mission to reduce dependence on the USD.
The bloc recently confirmed it is developing a new currency and is calling for more support.
BRICS is expected to provide updates on the new currency at the BRICS Summit in Russia this October.
According to Watcher.guru, BRICS aims to launch a new gold-backed currency to counter the USD. A common currency would usher the alliance into a new financial era and serve as a foundation for further developments.
Moreover, with BRICS' recent gold-buying spree, some financial experts believe that a gold-backed currency could mark "the beginning of the end" for the USD.
In an analysis for the intelligence consulting firm GIS published last week, expert Vahan Roth wrote about the recent surge in gold prices.
Gold prices reached a new record high of 2,480 USD per ounce on July 17, 2024.
Roth said this price increase is not surprising given the ongoing geopolitical situation in the world.
“There are two wars ongoing - in Ukraine and the Middle East - and either one (or both) could escalate at any time into a broader international conflict,” he said.
“Meanwhile, highly influential elections are taking place this year in India, the United Kingdom, and the European Union (EU). Some incumbent leaders have lost influence. Mexico has a new leader with the same leftist agenda, and the unpredictable U.S. presidential election in November is approaching,” Roth noted.
The World Gold Council stated that BRICS has been the largest gold buyer since 2022. The bloc is accumulating tons of precious metal in reserves.
Roth pointed out: “BRICS supports a more multipolar world order, and the founding members of the group have proposed the idea of establishing a gold-backed currency.”
According to Roth, regardless of how one assesses the practical prospects of such a currency and its potential impact in the real world, and despite the fact that BRICS is a relatively loose alliance (compared to the European Union EU, for example), BRICS still includes about 3.5 billion people, equivalent to 45% of the global population, controls 30% of the world's land area, and the economies of its members account for over 37% of global GDP.
The GIS expert noted that a BRICS gold-backed currency could be a game-changer in the financial world. This future currency could also push the USD to take a back seat.
Developing countries might start de-dollarization and adopt the new BRICS currency for cross-border transactions. This would help strengthen BRICS and other emerging economies.
