Russia Confirms BRICS Will Create A Gold-Backed Currency
The comments below are an edited and abridged synopsis of an article by Neils Christensen
Russia has confirmed that Brazil, Russia, India, China and South Africa (BRICS), will introduce a new trading currency backed by gold. This is expected to be announced during the BRICS summit in August.
This news is adding new momentum to the ongoing de-dollarization trend unfolding in the global economy. Since mid-2022, central banks worldwide have been buying gold at a historic pace in part to diversify their reserves away from the US dollar.
For many analysts, a gold-backed currency is the next evolution in this process. Many have seen China’s recent gold purchases as an attempt to bring international credibility to the yuan.
At the same time, the US government’s weaponization of the dollar against Russia for invading Ukraine has created some geopolitical uncertainty among nations allied with Russia.
While the prospect of a gold-backed BRICS currency will provide significant support for gold, some analysts expect that it will take time before the impact is felt in the market.
Many analysts have been speculating about a new global currency to challenge the dollar’s role as world reserve currency. In March, former Goldman Sachs chief economist Jim O’Neill wrote that the dollar’s dominance is destabilizing global monetary policies. He added that a BRICS currency, challenging the dollar’s dominance, would bring stability to the global economy.