Africa -China Review Africa -China Cooperation and Transformation
Published:July04,2022
By Staff writer
The Russian president Vladimir Putin is reported to have announced recently that his country alongside China and BRICS nations, were setting plans to launch a new global reserve currency made up of basket of BRICS currencies. If the plan succeeds, the reserve currency is expected to be a direct threat to the US dollar that has dominated for decades as a global trading currency.
The news about the planned BRICS currency comes at a time Iran and Argentina are said to have applied to join the block. The drive to join BRICS is seen as an opportunity to counter western led hegemony and globalization. Currently, the BRICS account for almost 32% of the global GDP, going by the PPP basis. The share rises to 33% with the acceptance of Iran and Algentina to the BRICS. Other countries that have previously expressed willingness to join the block include; the United Arab Emirates, Saudi Arabia, Egypt, Nigeria, Senegal, Kazakhstan, Indonesia, and Thailand. Financial analysts believe that the expanded BRICS will make a large trading block that can justify putting in place a reserve currency.
In terms of production and Natural resources, the expanded BRICS countries produce 50 % of iron ore, 40% of global corn, 46% of global wheat production and 26% of oil output. Economists are of the view that if all the products were traded in the new reserve currency, it would undoubtedly become the pillar of the world economy. The “BRICS Plus” mechanism was introduced at the BRICS Summit in Xiamen, Fujian province, in 2017.
According to a recent IMF released a report released by the end of June, shows that the US dollar currently makes up 59% of global reserves, falling from 70% in 1999. The report highlights that central bank reserve managers were shifting their portifolis away from the dollar into non-traditional currencies.
The west is also not sleeping. The current war between Russian and Ukraine was sparked by NATO and its allies mainly the US, with intentions to expand its area of influence militarily and economically. The war has exposed the fault line of two main alliances as US and allies under NATO Vs Russia and China under the BRICS.
Philip Pilkington an Irish economist and author of The Reformation in Economics,
Says that the changes taking place in the global economy are the biggest experienced since 1945, yet very little is talked about the subject in the press and by politicians. Philip questions whether western leaders have a strategy for the unfolding new world and the impact on the western living standards. Edging out the US dollar may not be realized without a spirited fight from the US to weaken economies of the BRICS countries especially Russia and China. The current sanction against Russia by US and the trade wars between US and China where companies like Huawei were pushed out of the US market are just a few examples to show that the battle to weaken Russia and China economies is already on.
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