What is the ongoing dispute on the establishment of a common currency among the BRICS nations?

The heads of state of Brazil, Russia, India, China, and South Africa are scheduled to gather in Johannesburg for the 15th BRICS Summit. Although it is projected that Russian President Vladimir Putin will not attend, leaders from other nations are expected to participate in the summit, which is scheduled  to take place from August 22 to 24 in the South African metropolis.

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Numerous subjects are supposedly under consideration, one of which is establishing a unified currency for the BRICS nations.

The BRICS collaboration unites five prominent emerging economies from around the world, together representing a significant portion of the global gross domestic product (GDP), amounting to 24 percent. The terms were first used by economist Jim O'Neill at the beginning of the 2000s.

Prior to the summit, there has been a dispute around the discussions on the potential adoption of a single currency among the BRICS nations. This currency is being considered as a potential alternative to the United States dollar, specifically inside the member nations of the BRICS bloc.

Lord Jim O'Neill, a renowned economist formerly associated with Goldman Sachs and credited with coining the BRICS acronym, has expressed his disapproval of the notion of implementing a shared currency among the member nations of the BRICS bloc, considering it to be "ridiculous."

What is the plan for a single currency for the BRICS?

Alexander Babavov, the deputy speaker of the Russian Parliament, was the first person to say that the BRICS group and African countries were thinking about making a shared currency. This was in April of this year.

In the same month, Brazilian President Lula da Silva agreed with the idea and proposed the currency as an option to the US dollar.

The BRICS nations all want their own currency, but why?

The main aim of the suggested action is to achieve de-dollarization, which means reducing reliance on the United States Dollar as the dominant global reserve currency. According to Reuters, this aligns with the objectives of the Development Bank (NDB) to reduce reliance on the US dollar in financial transactions and provide an alternative to the Bretton Woods institutions. The call for de-dollarisation has experienced a surge in momentum in recent years, mostly driven by the increased interest rate policies implemented by the US Federal Reserve.

India's objective is to carry out its financial operations using the national currency, the rupee, or alternatively, other currencies. In a recent development, the United Arab Emirates and India have made the decision to conduct their crude oil transactions using their respective national currencies.

The correlation between the desire for a unified currency among BRICS nations and the ongoing conflict between Russia and Ukraine is evident. The imposition of sanctions on Russia's banking sector in response to its invasion of Ukraine has resulted in its exclusion from the global financial cycle.

What is the official position of the Indian government about the BRICS currency?

In July, the Indian Minister of External Affairs, S Jaishankar, expressed that the concept of a BRICS currency was not under consideration. According to South African officials, discussions for the establishment of a BRICS currency have been dismissed, as reported by Reuters.

During a news conference held in July, the External Affairs Minister of India, S Jaishankar, stated that the Indian government currently does not possess any intentions to introduce a currency specific to the BRICS (Brazil, Russia, India, China, South Africa) group. In contrast, the Indian government is currently prioritising efforts to enhance the strength of its national currency, with a particular focus on strengthening the value of the Rupee.

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