By Helmo Preuss
A gold-backed BRICS common currency is unlikely in the short term as it would require a synchronised monetary policy, experts say.
The Centre for European Policy Analysis (CEPA) held a preview of the 16th BRICS Summit to be held in Kazan, Russia from 22 to 24 October.
It featured Irina Busygina and Alexander Kolyandr from CEPA as well as Evgeny Roshchin from the Henry A. Kissinger Centre for Global Affairs at Johns Hopkins University with Edward Lucas from CEPA as the moderator.
Kolyandr said a gold-backed BRICS common currency was unlikely in the short term as it would require a synchronised monetary policy. At the moment China and South Africa are cutting their policy rates, while Brazil and Russia were raising theirs and the Reserve Bank of India (RBI) kept its benchmark policy repo rate at 6.5% for the tenth consecutive meeting in October 2024.
Other members also pointed out that at the moment there was no free movement of capital, goods, services and people between BRICS member countries, so having a common currency such as the Eurozone’s euro was not practical.
There would, nevertheless, be a drive by Russia to create a payment system that was independent of US influence as both Russia and new BRICS Plus member Iran are subject to Western sanctions.
The BRICS Summit is a counterpoint to the US-dominated International Monetary Fund (IMF) / World Bank meetings being held in Washington from October 21 to 26 .
The BRICS Summit will host guests from 33 countries and will allow Russian President Vladimir Putin to present himself on the world stage. In addition to the geopolitical significance of the meeting, economic cooperation and free access to new markets as well as the creation of new financial and settlement instruments that are not dominated by the West are of particular interest to Russia, and this thread is reflected in the BRICS motto: ‘Strengthening Multilateralism for Equitable Global Development and Security’.
In the run-up to the Summit, work has begun on the creation of payment and settlement systems (BRICS Pay) for the use of national currencies. To this end, a BRICS Pay Consortium has been formed to develop solutions for private customers/retail (BRICS Pay QR), business customers (BRICS Pay B2B) and BRICS Clear (intergovernmental digital settlement system for cross-border securities transactions based on blockchain technology). Due to the different starting points and interests as well as the technical challenges, a long coordination and implementation process is to be expected here as well.
What the panel members were particularly interested in seeing coming out of the Summit were the institutional arrangements. At the BRICS Summit in Fortaleza, Brazil in 2014, a new development bank had been proposed and that has now been operationalised with all the original BRICS member countries benefiting from loans from the development finance institution.
Panel members were also concerned whether new members such as Egypt, Ethiopia, Iran and the United Arab Emirates, as well as potential new members from Africa, Asia and South America might be intimidated by the economic might of China, as they might not want to change from a US hegemony to a Chinese hegemony.
When asked how the West should react to the BRICS, panel members said they could no longer ignore it as they may have done in the past, but rather engage with them to solve global issues such as pandemic preparedness and climate change that ignored political borders and ideologies.
To this end, the panel members would scrutinise the pledges made at the Summit and their subsequent implementation. In that respect, the panel members would like to see that the BRICS Cooperation in Customs Matters Agreement has been signed.
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