Pavel Knyazev assesses the prospects of introducing a single BRICS currency

The BRICS countries continue to discuss the possibility of introducing a common single currency and the implications of such a move. Pavel Knyazev, Russia's Sous-Sherpa in BRICS, gave an exclusive commentary to TV BRICS, where he outlined how this decision could help the development of the states of the Five.

"This issue has been coming up more often recently. The abuse by individual states of their dominant position in international finance reinforces the processes of fragmentation of the world economy and inequality in the development of states. This creates additional obstacles to the restoration of economic growth, first of all, of developing countries, objectively pushes the spread of new national and cross-border payment systems, and also causes a growing interest in new international reserve currencies, resistant to interference by third countries," said the diplomat.

Knyazev mentioned that the current international financial system is based on the dollar, but it has outdated itself as the main currency, given the change of the world order and the formation of multipolarity. Many states are thinking about possible alternatives to the dollar, including increasing the role of national currencies in mutual settlements and the formation of new payment mechanisms. The BRICS countries have also long been taking measures to reduce the role of the dollar in mutual settlements and to switch to settlements in national currencies.

"Against such a background, the proposal of Brazilian President Luiz Inacio Lula da Silva to think about the creation of a single BRICS currency sounded relevant. Let me remind you that at the meeting of the leaders of the Five in June 2022, Russian President Vladimir Putin also spoke in favour of establishing an international reserve currency based on a basket of currencies of the BRICS countries. We do not rule out that the topic of settlements in national currencies will be developed during the summit of the association in South Africa"

Pavel Knyazev Russia's Sous-Sherpa in BRICS

However, the diplomat said, it should be clear that there is a lot to be done from the idea to its practical realisation. The creation of a single currency implies the existence of a single issuing centre and regulator, coordination of its powers, possible transfer of the rights for money issue to a supranational body, which would require, among other things, synchronisation of macroeconomic and monetary policy in the unification. The BRICS countries are not ready for this yet.

On the other hand, the establishment of a BRICS payment instrument based on a basket of currencies of the five countries, while preserving national currencies, would help mutual settlements without recourse to the dollar. All this requires in-depth study by the relevant governmental bodies in the BRICS countries.

"In any case, the issues of building an efficient payment infrastructure are among the priorities of the BRICS work on the financial track. I am confident that we will be able to work out algorithms of interaction that suit all five countries, and in the future we will be able to extend this positive experience to our operations with third countries. The Russian side will participate in these discussions with interest," concluded the Russian Federation's Sous-Sherpa in BRICS.

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