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Russia taking over BRICS chair boosts momentum for currency.

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The final day of the 15th BRICS summit has brought the announcement of six new members, reigniting excitement and controversy over the creation of a BRICS trade currency to rival the US dollar. Brazilian President Luiz Inacio Lula da Silva, the most vocal proponent of the common currency project, stated that the new currency would improve payment conditions and reduce vulnerabilities among BRICS members. Lula also criticized the current global finance system, emphasizing the need for alternatives that better suit the needs of developing countries. The reemergence of the common currency issue is significant as the BRICS chairmanship passes to Russia, with President Vladimir Putin being the most vocal advocate for de-dollarization at the summit. Putin highlighted the ongoing move away from the US dollar within BRICS and expressed his stance against the exclusivity and neo-colonialism promoted by some countries.

Looking ahead to next year’s summit in Russia, Putin outlined an ambitious economic plan for the bloc, including increasing the role of BRICS states in the international monetary and financial system, deepening interbank cooperation, and expanding the use of national currencies. However, the addition of six new countries to the bloc in 2024 could complicate the consensus on the common currency, making it more challenging to reach an agreement. Patrick Lukusa of Johannesburg’s University of the Witwatersrand suggested that a change in the decision-making model from consensus to majority vote may be necessary. Despite the challenges, the pursuit of a common currency remains important to the host nation, and discussions on the issue are expected to continue.

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