The BRICS group of nations will discuss the establishment of sustainable payments mechanisms for mutual trade at their upcoming summit next month, according to the Foreign Ministry in Moscow. The ministry highlighted that in the current international situation this issue needs to be addressed, referring to the summit taking place in Johannesburg, South Africa from August 22-24.
The use of national currencies in mutual trade is complicated by factors such as their limited convertibility and higher volatility compared to the US dollar, the Russian Foreign Ministry explained. They also acknowledged that the potential creation of a new BRICS single currency would be a delicate process.
Members of the BRICS group have been moving away from the US dollar in their mutual trade, with the de-dollarization trend gaining momentum. The sanctions imposed on Russia that effectively cut them off from Western financial mechanisms have further motivated the BRICS nations, including China, India, Brazil, and South Africa, to explore alternative currencies in trade.
Russia proposed the idea of introducing a BRICS currency last year. In June, President Vladimir Putin announced that the member states were working on developing a new reserve currency based on a basket of the national currencies used by the five-nation bloc.
The discussions at the upcoming summit will focus on finding solutions to overcome the challenges of using national currencies in mutual trade. The volatility and restricted convertibility of these currencies make it difficult for businesses to engage in trade without relying on a more stable and widely accepted currency such as the US dollar. By establishing sustainable payment mechanisms, the BRICS nations aim to reduce their reliance on the US dollar and increase the stability of their trade relationships.
The process of creating a new BRICS single currency will require careful consideration and coordination among the member states. It is a delicate endeavor that involves aligning the different economic policies and priorities of each nation. However, the benefits of having a common currency for the BRICS nations could lead to greater economic integration, increased trade, and enhanced financial stability within the bloc.
The BRICS summit serves as a platform for the member states to discuss and strategize on issues of mutual interest, including economic cooperation, trade facilitation, and financial integration. The discussions on sustainable payment mechanisms for mutual trade will contribute to the ongoing efforts of the BRICS nations to strengthen their economic ties and promote a more balanced and sustainable global financial system.
In conclusion, the upcoming BRICS summit will provide an opportunity for member states to address the challenges associated with using national currencies in mutual trade and explore the potential creation of a new BRICS single currency. By establishing sustainable payment mechanisms, the BRICS nations aim to reduce their reliance on the US dollar and promote greater economic integration within the bloc. The discussions and decisions made at the summit will have implications for the future of trade and finance among the BRICS nations, as well as for the broader international financial system.
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