The BRICS 2023 summit is set to take place from Tuesday, August 22, in Johannesburg.
One of the key discussions that will be closed at this historical gathering will be the proposed creation of a new currency.
In a webinar hosted by the Inclusive Society Institute and its chief executive, Daryl Swanepoel, professor William Gumede gave his insights on the matter.
Gumede, who is the associate professor at the Wits School of Governance said it would take a significant amount of time to create a BRICS currency and that the process would be very complicated.
“The Russia-Ukraine war is likely to increase the de-dollarisation of the world. Russia is trying to circumvent Western economic sanctions against it as a result of its conflict.
"It is increasingly pushing the alliance to increase the use of BRICS currencies in trade between members, reduce the use of the US dollar, and ultimately speed up the formation of a common currency," said Gumede.
According to the academic, independent central banks in Brazil and India are wary of the inception of a currency for the economic bank. He said India, which became independent in 1947, will become a developed nation by 2047.
"This summit is important because it is the first time since South Africa joined that there are any new members joining, and it’s quite an extraordinary number."
Gumede offered some ways in which the BRICS currency can become feasible:
Expansion
The professor said it would be easier to form the currency if particular countries joined. He said it is critical for the alliance to expand and mostly include nations that have oil, such as those in the Gulf, the United Arab Emirates, Iran, and more.
Gumede also stated that many big developing nations are keen to join the BRICS alliance, which they regard as a bulwark against what they see as developed world hegemony in markets, ideology, and culture.
New countries increasing trade
For the currency to survive, nations within the economic bloc will need to trade with each other and other countries much more. If there are enough countries, it might just be possible, according to the expert.
Gumede said he foresees a problem with this because India wants the way in which new members are accepted to be changed to have specific criteria, which may decrease the number of countries accepted into the group.
Solving disputes within the group
With divisions in terms of how the group should accept new members and be run, it will make this herculean task even harder.
So, if the countries do come to some consensus, they will still have some time before the proposed currency becomes implemented or even works, said Gumede.
IOL