Ahead of the annual BRICS summit in South Africa, renowned macroeconomist Lyn Alden has expressed skepticism regarding the feasibility of a proposal to establish a common currency among the BRICS nations. She believes that such an initiative, aimed at challenging the dominance of the United States dollar, may encounter significant challenges and ultimately struggle to materialize.
The proposal under discussion involves the collaboration of five major economies: Brazil, Russia, India, China, and South Africa (BRICS). The objective is to create a unified, gold-backed currency for broader adoption, potentially as an alternative to the US dollar.
In an interview with Cointelegraph, Alden emphasized that crafting a gold-backed currency for widespread usage would be “very hard” for the BRICS member countries. While the idea of a common BRICS currency might seem appealing on the surface, several intricate hurdles could hinder its realization.
Alden’s skepticism lies in the complexity of coordinating the economic policies, monetary systems, and regulatory frameworks of the diverse BRICS economies. Each member nation possesses distinct economic dynamics, fiscal policies, and levels of financial development. Aligning these factors to create a unified currency could prove exceedingly challenging.
Additionally, the long-standing global dominance of the US dollar presents an uphill battle for any prospective challenger. Alden asserts that challenging the dollar’s preeminent position would require not only a well-structured currency but also a comprehensive ecosystem that addresses transactional efficiency, security, and a stable store of value.
While the idea of a gold-backed currency holds historical significance and economic appeal, Alden’s analysis underscores that the complexities of implementation and the uphill battle against existing currency hierarchies might hamper the BRICS’ aspirations.
As the BRICS summit convenes to discuss economic cooperation and global issues, the prospects of a common currency will likely remain a topic of intrigue and speculation, sparking debates on the viability of challenging the established global monetary status quo.
