Reza Majidzadeh – researcher in the field of economics

First, in 2018, the five BRICS founding countries decided to design a single currency for the BRICS member countries. This idea became bolder after the imposition of sanctions against Russia in 2023, and the BRICS payment system was also proposed. Of course, before this, China had told its banks to distance themselves from SWIFT in response to possible US sanctions for the passage of Hong Kong’s security law in its National Congress. This desire was not only limited to the BRICS  countries, but other countries, including Iran, which were subject to the international sanctions of the United States, also showed interest in this option. However, the BRICS currency has not yet been implemented. If it is realized, it will be used as an intermediary for transactions between BRICS members and BRICS-friendly countries, as it can be said that the second union currency will emerge after the euro.

From a theoretical point of view, to be accepted as money, valid and endorsed by among at least BRICS members, the BRICS currency should have three main functions: a means of measuring value, A means of exchange, and a means of storing value. All three functions indicate that a currency is accepted by all people, organizations, and units in the territory covered by that currency. Of course, the third function becomes relevant in the conditions of risk and uncertainty, and the risk of non-monetary assets increases.

The first function becomes possible after designing a complementary system between BRICS and BRICS Plus members. The BRICS countries have nearly a third of the world’s gross domestic product, and this complementarity is possible. As soon as the first function is realized, the second function will also be activated, and considering the share of BRICS members and new members in world trade (in terms of exports and imports), its realization is not far from imagination. Moreover, BRICS will soon account for half of the world’s population. However, it should be noted that besides these facts, the prominent members of BRICS, including India and China, have extensive trade with the United States, which means continuing their demand for the US dollar. Therefore, it cannot be said that the BRICS currency will replace the dollar. In the best case, it can be a competitor to the dollar, like the euro, and weaken its dominant role in the world economy and trade.

However, the American reaction to the BRICS summit also shows the high capacity of the BRICS currency, so the weakening of the dollar and the creation of an alternative to SWIFT is considered a threat to democracy in the world. The future of the possible competition between the BRICS currency and the dollar depends on factors such as the end of the war in Ukraine and Russia’s new position in the international political economy, the technological-economic competition between China and the United States, and especially China’s ability to continue the “Made in China 2025” strategy on the one hand and the US approach depends on inflation and the national debt issue of this country, especially considering the country’s substantial financial aid to the Israeli regime. Although, from the point of view of international trade, a country’s national debt does not indicate its weakness and reflects the international credibility of a country, its effect on weakening the value of the national currency can be challenging.