Some time ago, Russian Foreign Minister Sergei Lavrov announced that plans to create a single currency for the association would be discussed at a meeting of the leaders of the BRICS countries in August this year. Actually, the idea is not new. It arose in 2018, when the idea was to create a single monetary unit based on a basket of currencies from the participating countries. It was supposed to be called P5, because all the national currencies of the association begin with the letter “r”: Brazilian reais, Russian rubles, Indian rupees, South African rands, as well as Chinese renminbi, literally – “people’s money”, widely known. by the name of one of the monetary units: yuan. In 2014, the New Development Bank, the BRICS bank, was created to replace the IMF in the system of financial relations between countries. In March of this year, former Brazilian President Dilma Rousseff was elected its leader.
The first serious step towards the creation of our own payment system was the displacement of dollars and euros by national currencies in the mutual trade of the BRICS countries. Among the significant successes, one can mention a significant reduction in the share of the currency of hostile countries in payments for Russian exports – from 87% at the beginning of 2022 to 48% at the end, so that now more than half of the calculations fall on the ruble and friendly currencies. The structure of import payments has also changed: the share of currencies from hostile countries here has decreased from 65% (January 2022) to 46% (December); now they represent less than half of the billing. Of the latest achievements in terms of currency import substitution, the March agreement between Brazil and China stands out, which agreed to trade in yuan and reais, as well as to establish a clearing house that allows direct settlements without converting their currencies into dollars.
The logic of the process, in general, is clear. China is the largest economy in the world in terms of purchasing power parity, the main importer of raw materials, energy and food, it is also the world factory of various industrial products. In this sense, more and more settlements in Chinese currency and other national currencies are a way to reduce costs, since the new scheme eliminates the need to have a reserve of dollars for international payments.
Well, on the other hand, the BRICS currency as a basket of national currencies is, rather, an impassable idea. Due to the difference in weight classes, China will dominate in this basket, and the participation of other countries will be negligible. So, at the present stage, it is better not to fence the garden, not to weave baskets, but to use the yuan as the universal currency of the BRICS countries. This is exactly what Russian President Vladimir Putin was talking about when he suggested that partners switch to the yuan in mutual trade, regardless of whether China is involved in trade transactions or not.
However, the story of the BRICS single currency is far from over. In fact, in the first stage it is possible to use the yuan as a universal currency. On the other hand, it obviously has disadvantages. The community of large sovereign states will obviously not want to transfer the management of international agreements to one of the countries, even if it is the strongest economically. The strength of the yuan depends on the state of the Chinese economy and the international reserves of this country, but they can change under the influence of external and internal shocks.
Therefore, the yuan as the single currency of the BRICS may not work. The basis of the new currency should be real assets: gold, oil, non-ferrous and rare earth metals, food, coal, in a word, everything that is of interest to world markets and that is produced in the BRICS countries. Countries that have new money must be sure that they can exchange it at any time for the industrial goods necessary to maintain the quality of life of their own citizens.
At the same time, money itself can be built on the model of anonymous, distributed ledger-based cryptocurrencies. As a universal measure of value, you can choose gold, to which other assets will be linked at certain cost ratios based on international market prices. The situation is made easier by the fact that Russia, China and South Africa are among the ten largest gold mining countries in the world, with China and Russia ranking first and second. So participating countries have serious opportunities to fill money with real value. Therefore, a golden cryptoruble may well appear.
An important element of the infrastructure of the new currency should be the storage of cash assets linked to anonymous crypto accounts. Where the owners, of course, are also anonymous, they will be able to exchange their goods for cryptocurrencies, and then traditional money, and then, if necessary, convert them into dollars, euros or currencies of other countries. The best location for anonymous storage of cash assets may be the Gulf countries, China or Hong Kong, for example. With gold, non-ferrous metals, and rare earths, this is easier to do due to their higher unit cost. Exchanging impersonal and anonymous gold for cryptocurrencies with its subsequent exchange for yuan, among other things, will allow you to circumvent European sanctions that prohibit gold trade with our country.
It is more difficult to create a spot oil market due to its large volumes, although this is also a problem to be solved. This requires a large fleet of warehouses, where batches of products from different countries will be mixed and resold to new buyers for the same cryptocurrency. And, as you know, blends in which the Russian share is less than half are not subject to sanctions.
In a word, the possibilities are impressive. The only pity is that all these fresh ideas have become in demand now, and not before. But better late than never.
