The dysfunctionality of the international monetary system based on the US dollar is leading BRICS countries to consider the creation of their own currency, according to Brazilian economist Paulo Nogueira Batista Jr. In an interview with RT, Batista expressed concerns about the trustworthiness of the dollar, stating that while it will remain an important global legal tender, it can no longer be relied upon.
Batista emphasized the growing dissatisfaction among emerging market economies with existing dollar-based financial institutions such as the IMF and the World Bank, which he believes do not cater to the needs of developing countries. He pointed out that BRICS countries have chosen to establish their own avenue for development, namely the New Development Bank (NDB), which was formed in 2014 by Brazil, Russia, India, China, and South Africa. The NDB, also known as the BRICS bank, was designed to be more responsive to the needs of emerging economies and is considered to be more “Global South-oriented” than the World Bank.
Speaking about the NDB, Batista highlighted its creation, which excluded the participation of advanced countries. He stated that the NDB was intentionally created by and for emerging economies to address the increasing multipolar nature of the world and the inadequacy of the existing Washington institutions.
Batista acknowledged that the US dollar will remain a significant currency but expressed concerns about its use as a weapon by the US to target countries deemed hostile to the West. This has led to a decrease in confidence in the dollar among other nations, uncertain about its continued use.
The economist emphasized that the multipolar world will lead to a reduction in the role of Western currencies, particularly due to the geopolitical use of the dollar, such as the recent sanctions against Russia.
According to Batista, BRICS has a crucial role to play in establishing its own reserve currency. He revealed that Russia has proposed naming the new currency ‘R-five’ to reflect the currencies of the BRICS countries, all of which start with the letter ‘R’ (real, ruble, rupee, renminbi, and rand).
Batista concluded by stating that he believes the R-five could start as a unitive account and eventually evolve into other steps.
The article highlights the BRICS countries’ increasing dissatisfaction with the US dollar-based international monetary system. Emerging market economies, such as those in the BRICS alliance, are seeking alternatives to the existing Western-dominated financial institutions that do not adequately address their development needs. The creation of the NDB, or BRICS bank, is a significant step towards establishing a more inclusive and responsive financial institution. Future developments may see the introduction of a new reserve currency for the BRICS nations, reflecting their desire for greater autonomy and independence from Western currencies.