04.10.2024 / News

BRICS Alliance Expands: Key Developments in September and Upcoming 2024 Summit

The month of September has marked another pivotal period for the BRICS alliance. With the recent inclusion of Egypt, Iran, Saudi Arabia, Ethiopia, and the United Arab Emirates into its ranks, the bloc continues to solidify its position on the global stage. Furthermore, the BRICS alliance is reportedly reviewing applications from over 30 additional nations and is exploring the implementation of a “partner country” model to facilitate cooperation with non-member states without formal inclusion.

On September 24-25, the BRICS Energy Cooperation Summit convened in Moscow. Member states engaged in discussions on enhancing energy collaboration, with a focus on increasing operational efficiency and advancing digital transformation within the sector. However, despite these critical deliberations, global attention is increasingly turning toward the forthcoming BRICS Summit in 2024. Scheduled to be held in Kazan in October, the summit is anticipated to unveil key details regarding the bloc’s future trajectory, including discussions surrounding a potential gold-backed BRICS stablecoin.

Is a Gold-Backed BRICS Currency a Reality?

The concept of a gold-backed BRICS currency remains speculative at this stage, though various signals from officials suggest the idea is under serious consideration. Notably, Russian Deputy Foreign Minister Sergei Ryabkov has publicly expressed the possibility of utilizing a gold-backed stablecoin to challenge the hegemony of the U.S. dollar in international markets.

In addition, Russia’s recent moves—such as regulating stablecoins and leveraging surplus energy for digital currency mining—indicate a growing recognition of the potential utility of digital assets. As the most sanctioned country globally following its exclusion from SWIFT, Russia is actively exploring alternative financial systems, further fueling speculation about the viability of a BRICS-backed digital currency. Although no formal declaration has been made, the upcoming Kazan summit is expected to shed light on these developments.

Can BRICS Rival the United States?

The U.S. dollar continues to dominate as the world’s reserve currency, with 88% of global foreign exchange trades involving the dollar. It also constitutes 60% of all foreign currency reserves, and at least 80% of global oil trade is conducted in USD.

Nevertheless, a noticeable trend toward de-dollarization is emerging among BRICS nations. The percentage of global reserves held in USD has decreased from 70% to 60% over the past decade, driven in part by factors such as the U.S.-China trade war and the freezing of $300 billion in Russian reserves following its invasion of Ukraine.

While the current dominance of the U.S. dollar remains largely unchallenged, especially considering that the United States and the European Union collectively account for nearly 45% of global GDP, the gradual shift away from the dollar is expected to persist, particularly within the China-Russia-led sphere. However, any significant challenge to the dollar's status is likely to unfold over the long term, rather than as an immediate disruption.

Historically, dominant currencies such as the Dutch guilder and the British pound have eventually ceded their position. As such, long-term de-dollarization within BRICS nations seems inevitable. The October summit is poised to provide further insights into the potential introduction of a BRICS-backed currency. Stay tuned for comprehensive coverage following the summit.