BRICS Currency ‚Very Hard‘ to Deliver: Investment Expert
• BRICS (Brazil, Russia, India, China and South Africa) have proposed a gold-backed currency to rival the US dollar as the global reserve standard.
• Investment strategist Lyn Alden has cast doubt on this proposal, claiming it would be “very hard” for BRICS nations to form such a currency.
• Former Goldman Sachs economist Jim O’Neil also dismissed the common currency notion as “ridiculous”.
Proposal of Gold-Backed BRICS Currency
Russian President Vladimir Putin first announced that BRICS (Brazil, Russia, India, China and South Africa) proposal to create an international reserve currency at the BRICS summit in 2022 to rival the U.S. dollar as the global reserve standard. This proposal was later confirmed to come in the form of a gold-backed currency.
Challenges for its Implementation
Investment strategist Lyn Alden has cast doubt on this proposal, arguing it would be “very hard” for BRICS members to form a gold-backed currency for widespread use due to fractional-reserve banking system coupled with gold only working temporarily since the number of units multiply more quickly than gold does itself. Former Goldman Sachs economist Jim O’Neil also dismissed the common currency notion as “ridiculous”.
Alden sees a more likely outcome would be that BRICS nations lessen its reliance on the USD for cross-border payments by increasingly using their own currencies for trade — particularly the Chinese yuan — instead of forming this new gold-backed currency they have proposed.
Reserve Practices in Different Environments
The BRICS hold G7 currencies as their reserves, and not vice versa; however they have flipped economic size compared to 10+ years ago which suggests that reserve practices may not stay same forever and can change over time according to different environments..
Impact on Bitcoin
The implementation of this proposed gold-backed BRICS currency could have an impact on Bitcoin if implemented; however its unlikely considering current challenges and other likely outcomes mentioned above