World leaders address economic challenges

Praneeta Mahajan
Hamilton, August 14, 2023

The BRICS countries have been pursuing a wide range of initiatives to decrease their dependence on the dollar. Over the past year, Russia, China and Brazil have turned to greater use of non-dollar currencies in their cross-border transactions, while central banks have sought to shift more of their currency reserves away from the dollar and into gold.

Even though the timing of the new BRICS (Brazil, Russia, India, China, and South Africa) currency is still a big unknown, it is an inevitable outcome, according to Andy Schectman, President and Owner of Miles Franklin.

He recently issued a detailed statement on the matter, and said, “It is coming. Whether or not it is a gold-backed currency that is introduced in a few weeks or a few months, or even next year, to me, the alliance that is being built represents the majority of the human population.’

85% of the global population to dump the U.S. Dollar

The BRICS club is building momentum, with up to 40 new members hoping to be admitted soon, but one new member looks to change the dynamics completely. “Saudi Arabia has for over 50 years been tied to the US and the dollar. Saudi Arabia not only wants to join the BRICS club but also wants to align with the Chinese-led Shanghai Co-operation Organisation which controls 40% of the world’s GDP. The addition of Saudi Arabia to BRICS could be the tipping point and will add momentum to the alternative currency,” said Chris Howard, a precious metals Investment expert.

The BRICS alliance is expected to expand its membership soon, with over 20 countries formally asking to join the BRICS, including Saudi Arabia, Argentina, Iran, the United Arab Emirates, and more.

The BRICS bloc expansion will play a vital role in the global de-dollarization move as member countries continue to push to ditch the greenback and trade using their currencies.

Saudi Arabia can be a game changer

Mr Schectman sees Saudi Arabia as an essential player in this transition, with eventually 85% of the global population dumping the U.S. dollar. “There is this cohesion of countries that have joined together to break free from the Western hegemony,” Mr Schectman said. “And I look to Saudi Arabia as the linchpin of all of the issues surrounding the de-dollarization and the dollar hegemony.”

The recent moves from Saudi Arabia should be alarming to the world’s reserve currency, Mr Schectman pointed out. “I see Saudi Arabia as a very important cog in that [de-dollarization] movement because when Saudi Arabia accepts other currencies for oil, the lack of settlement in the dollar will have substantial effects,” he said. “The glue that will make all of this work is indeed having a currency backed by commodities, presumably gold, using distributed ledger technology or blockchain. We can see how they are pushing away from the Western influence and getting very close with some powerful entities.”

The lead-up to the BRICS summit, taking place in Johannesburg on August 22 to 24, 2023, comes as countries across the world are confronting a changing geopolitical landscape that is challenging the traditional dominance of the West.

Anil Sooklal, South Africa’s Ambassador at Large to Asia and BRICS, told reporters last month that BRICS currency was not on the agenda for the upcoming summit.

“There has never been talk of a BRICS currency, it is not on the agenda,” Mr Sooklal said. “What we have said and we continue to deepen is trading in local currencies and settlement in local currencies.”

Indian Prime Minister Narendra Modi will be attending the BRICS Summit. This confirmation comes after a telephone conversation between Mr Modi and South African President Cyril Ramaphosa.

Praneeta Mahajan is an Indian Newslink reporter based in Hamilton.