BRICS Nations Turn to Gold to Challenge U.S. Dollar’s Dominance in Global Finance

CCNC
4 Min Read
pexels photo 321464
brics nations turn to gold to challenge u.s. dollar's dominance in global finance
brics nations turn to gold to challenge u.s. dollar's dominance in global finance 3

In a move that could potentially challenge the status of the U.S. dollar as the global reserve currency, BRICS nations (Brazil, Russia, India, China, and South Africa) are acquiring massive amounts of gold to back a new currency.

With the forthcoming BRICS summit in South Africa serving as a stage, the alliance is planning to introduce a gold-backed currency, stepping away from the standard norm of dependence on the U.S. dollar.

The Gold-Backed BRICS Currency: A Potential Game-Changer

The BRICS nations are actively amassing gold in the lead-up to this potential global currency revolution.

Over the past 18 months, these nations have amplified their gold purchasing to prepare the grounds for a new currency, potentially disrupting the current U.S. dollar-dominated international monetary system and reshaping cross-border transactions.

A Golden Strategy to Challenge Dollar Dominance

The concept of a gold-backed currency isn’t new, but it is one that has a profound impact. Gold has historically been viewed as a safe harbor, a stalwart against the unpredictable tides of economic crises, and an asset that’s far less likely to collapse compared to any fiat currency.

In light of this, countries in Asia, Africa, Latin America, and Europe are actively distancing themselves from the U.S. dollar for global settlements.

BRICS Nations Amass Gold to Liberate Themselves from Dependence on Dollar

China has procured 102 tonnes of gold, while Russia added 31.1 tonnes to its reserves in the recent half-year, and India added a noteworthy 2.8 tonnes to its gold reserves in 2023, marking the first significant addition in over a year.

These developments serve a twofold purpose: preparing the grounds for a new currency grounded not on the U.S. dollar but on the enduring value of gold and potentially disrupting the current U.S. dollar-dominated international monetary system, thus reshaping cross-border transactions.

Challenges of Introducing a Gold-Backed Currency

While the introduction of a new currency backed by gold is intriguing, it comes with its complexities. As Thorsten Polleit, chief economist at Degussa, highlights, the currency must be convertible into gold on demand to truly become a sound currency.

This requirement could pose significant challenges and, potentially, a shock to the current global fiat money system. The aftermath could include sharp devaluation of several fiat currencies against gold, including the BRICS currencies themselves, and subsequent skyrocketing goods prices.

Conclusion

The coming BRICS summit in August, the expected launch pad for the new currency, is an event to watch. The ripple effects of this bold move could resonate far beyond the borders of the BRICS countries, potentially redrawing the landscape of global finance. Countries in Asia, Africa, Latin America, and Europe are actively distancing themselves from the U.S. dollar for global settlements, and a gold-backed currency could play a pivotal role in challenging the dollar’s dominance.

Source Link

Share This Article
What Is Cryptocurrency? Crypto Token: Crypto Coin & Crypto Token: Know The Difference