Gold, the most appropriate choice for a new BRICS currency
The countries of the BRICS group (Brazil, Russia, India, China and South Africa) are seriously considering creating a new currency for international trade. This currency would be backed by gold, a decision that could have major implications for the global economy. Here's why gold is a wise choice for this new currency
Affirmation of an economic bloc
The BRICS have overtaken the G7 in terms of their weight in the global economy. To prosper, this bloc must reduce its dependence on the US dollar, which is both the reference currency for international trade and a weapon of economic sanction.
Dedollarization
BRICS officials have often spoken of the need to reduce dependence on the dollar. Gold offers a solid, independent alternative for international trade.
Universal trust
Gold is a trustworthy asset. It is not dependent on a foreign power and is stable. By pegging their currencies to gold, the BRICS would inspire confidence between non-homogeneous, non-bordering countries.
Growing gold reserves
BRICS gold reserves have been rising in recent years. By April 2023, the 5 current members officially held 5,650 tonnes of the yellow metal, a steady increase. This accumulation reinforces their position in favor of a gold-backed currency 1.
If the BRICS go ahead in the next few months, this new currency could change the dynamics of global gold reserves and strengthen the influence of countries holding gold reserves. 3. The choice of gold as a reference currency could well mark a major turning point in world economic history.
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