The New Development Bank, established by the BRICS nations in 2014, holds the potential to challenge the dominant position of the US dollar and the current fiat system, according to Chris Hart, the executive chair of the Impact Investment Group. In an interview with RT at the BRICS summit in Johannesburg, Hart explained that the lender, based in Shanghai, includes powerful economies such as Russia, Brazil, India, and China, which are rapidly growing and surpassing the G7 group as the largest economies in the world. He believes that the participation of economically successful states like Saudi Arabia could further strengthen and elevate the significance of the BRICS bank in the global financial system.
Hart described the BRICS bank as a “major institutional squad of economically powerful backers,” emphasizing its ability to provide various opportunities to reduce the costs and complexities of cross-border trade. He highlighted the interest in the BRICS bank from Saudi Arabia and other potential new members, suggesting that the institution could exert even more influence in the financial world.
One significant aspect that Hart mentioned is the potential consideration of a common currency by the BRICS countries, which could potentially be backed by gold. He criticized the current global financial system, which lacks a proper anchor since the US removed the gold standard in 1971. He argued that the ability to print currencies out of thin air and inflate their value has undermined the system’s integrity and stability. By pegging a future BRICS currency to gold, Hart believes that the financial system’s “honesty” would see a substantial improvement.
The notion of a gold-backed currency is not unprecedented. Historically, gold has been recognized as a store of value and a measure of wealth. Using a tangible asset like gold as a basis for a currency can provide stability and confidence to participants in the financial system.
The idea of a BRICS common currency challenges the dominance of the US dollar, which has long served as the world’s reserve currency. Critics argue that the dollar’s position allows the United States to exert excessive control over the global economy, enabling the government to manipulate the currency and leverage its economic power. Developing a BRICS currency could offer an alternative to the current system, fostering more balanced and equitable economic relations among countries.
Hart’s comments reflect the growing importance of the BRICS countries on the world stage. As they continue to strengthen their economies and assert themselves as significant players in global trade and finance, their desire for greater autonomy and influence over the international financial system becomes more apparent. The establishment of the New Development Bank and the potential introduction of a common currency are initiatives aimed at challenging the current status quo and reshaping the balance of power in the world of finance.
In conclusion, the New Development Bank, established by the BRICS nations, represents a significant development in the world of finance. It has the potential to challenge the existing financial order dominated by the US dollar. The addition of economically successful states like Saudi Arabia as potential members could further enhance the bank’s influence. The consideration of a gold-backed common currency by the BRICS countries may provide a more stable and trustworthy alternative to the current financial system. The emergence of the BRICS bank and the potential changes it could bring demonstrate the increasing power and influence of these economies and their determination to reshape the global financial landscape.