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PM Modi is going to Russia for BRICS summit: The 16th BRICS summit is being held in Kazan city of Russia from today. In which PM Modi is also participating in this conference. The history of BRICS may not be very old compared to an influential group like G-7, but big decisions can be taken in this summit which can have a big impact in the future. One of which is BRICS currency.
There may also be discussion on introducing reserve currency by BRICS countries.
BRICS is a group of nine countries. These nine countries include Brazil, China, Egypt, Ethiopia, India, Iran, Russia, Saudi Arabia, South Africa and United Arab Emirates (UAE). In such a situation, the BRICS country wants to start a reserve currency so that the dominance of the dollar can end. This can be discussed by the member countries in the BRICS summit to be held from 22 to 24 October.
So that the economic strength of the member countries can also be increased.
Currently the US dollar dominates the international financial system. About 90 percent of world trade takes place in US dollars. Till now, 100 percent oil trading was done in US dollars only, but last year some oil trading has started taking place in non-US dollars also.
Apart from this, if the BRICS countries agree on this new currency amidst the US trade war with China and US sanctions on China and Russia, then it will challenge the international financial system as well as increase the economic strength of these member countries. Could.
Why do BRICS countries want a new currency?
BRICS countries are in need of a new currency due to recent global financial challenges and aggressive US foreign policies. So that global dependence on US dollar and euro can be reduced.
The need for this new currency was first discussed during the 14th BRICS summit in 2022. After this, in April 2023, Brazilian President Luiz Inacio Lula da Silva also supported the BRICS currency proposal.
How will the BRICS currency affect the US dollar?
The US dollar has had unilateral dominance over the world for decades. According to the US Federal Reserve, between 1999 and 2019, 96% of international trade in the US was in dollars, 74% of trade in the Asia Pacific region, and 79% of trade in the rest of the world was in US dollars.
However, in recent years financial transactions have also begun to take place in euros and yen. But still the dollar is still the most used currency globally.
According to experts, if BRICS countries start using the new BRICS currency instead of dollars for trade, then it may affect America's power to impose sanctions. So that the effect of dollar can be eliminated.