What Is the BRICS?
BRICS stands for Brazil, Russia, India, China, and South Africa as a whole. Jim O’Neill, a Goldman Sachs economist, coined the name BRIC (without South Africa) in 2001 and predicted that by 2050, the four BRIC nations will dominate the global economy. South Africa was added to the list in 2010.
In the 2000s, this theory gained widespread acceptance in the marketplace. However, there have always been detractors, some of whom thought the phrase was simply Goldman’s marketing jargon. In 2015, Goldman merged its BRICS-focused investment fund with a larger emerging markets fund, closing the vehicle.
BRICS And Its Importance In The Modern World Order
Brazil, Russia, India, China, and South Africa make up the acronym BRICS. The acronym BRIC was created in 2001 by Goldman Sachs economist Jim O’Neill, who predicted that by 2050, the four BRIC economies will take control of the global economy.
South Africa was added to the list in 2010. One-fourth of the global GDP is accounted for by the BRICS nations. Four of the five BRICS nations are among the most populous and huge in terms of area.
The BRICS nations were united in their ambition to reform the global monetary and financial institutions and to establish a more equitable and just international order. The BRICS region, which makes up one-third of the world GDP and 17% of global commerce, is crucial in determining global economic policy and advancing financial stability.
The BRICS nations have significantly reduced poverty on a global scale. The BRICS must continue to expand if we want to reduce global inequality and poverty.
BRICS has lately emerged as the voice of developing nations, or the global South, and has played a crucial role in protecting the rights of the developing countries of the globe via efforts to reduce poverty and steadfast attempts to bridge imbalances.
As BRICS grows from 5 to 11, Modi says it sends a message to all international organizations.
The BRICS, which consists of Brazil, Russia, India, China, and South Africa, resolved to add six additional members on Thursday. Saudi Arabia, Iran, the United Arab Emirates, Egypt, Ethiopia, and Argentina will join the BRICS starting on January 1, 2024.
We have unanimity on the first part of this BRICS expansion process, remarked South African President and Summit host Cyril Ramaphosa, together with Prime Minister Narendra Modi, Chinese President Xi Jinping, and Brazilian President Luiz Inacio Lula da Silva. Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates will be extended an invitation to join BRICS as full members.
According to Ramaphosa, “We value the interests of other countries in establishing partnerships with BRICS and have tasked our Foreign Ministers to further develop the BRICS partnership model and list of prospective countries (which want to join the grouping).”
He said that after the expansion process’ guiding principles, criteria, and method were established, it was decided to accept the new members. Approximately 23 nations have formally requested to join the organization thus far.
In a tweet, Prime Minister Modi stated, “We have decided to broaden this forum in honor of the BRICS’ 15th anniversary. India has always been a strong proponent of this growth. The BRICS will become stronger and more productive with such an expansion.
He said that the “expansion and modernization” of the BRICS sends a message to other institutions throughout the world that they must adapt to the times.
“India has consistently given the BRICS membership expansion its complete backing. India has believed that the accession of new members will strengthen BRICS as a group and give all of our joint initiatives a fresh push,” he added.
According to Modi, the move to broaden the bloc will increase nations’ confidence in the multipolar international order.
What is a BRICS currency, and could one be adopted?
To lessen their reliance on changes in the dollar exchange rate, the president of Brazil called on the BRICS countries to establish a single currency for trade and investment.
Luiz Inacio Lula da Silva remarked at a BRICS gathering in Johannesburg.
Officials and economists have noted the difficulties that would be faced by such a project because of the economic, political, and geographic disparities between Brazil, Russia, India, China, and South Africa.
Why does Lula seek a currency for the BRICS?
The president of Brazil has argued against requiring countries who don’t use the dollar to transact in it and in favor of a single currency for the Mercosur group of South American states.
According to him, a BRICS currency “increases our payment options and reduces our vulnerabilities,” he said during the summit’s opening plenary.
How about the other BRICS leaders?
Officials from South Africa had stated that the summit’s agenda did not include a BRICS currency.
India’s foreign minister stated that “there is no idea of a BRICS currency” in July. Before leaving for the conference, its foreign secretary said that increasing commerce in local currencies would be explored.
Vladimir Putin, the president of Russia, said that the meeting, which he joined via video link, will discuss moving trade away from the dollar and towards national currencies.
China has not responded to the concept. At the conference, President Xi Jinping advocated for “the reform of the international financial and monetary system”.
Also read: All you need to know about ‘Bharat NCAP’, effective from 1st October 2023
What challenges does creating a BRICS currency present?
The governor of South Africa’s central bank, Lesetja Kganyago, stated in July that the creation of a BRICS currency would be a “political project.”
Is the US Dollar in trouble?
The dollar dramatically grew last year as the Federal Reserve boosted interest rates and Russia invaded Ukraine, increasing the cost of dollar debt and numerous imports. Leaders of the BRICS nations have stated that they wish to use their national currencies more frequently instead of the dollar.
The expulsion of Russia from international banking systems due to sanctions last year fueled rumors that non-western allies might abandon the dollar.
According to Putin, “the objective, irreversible process of de-dollarization of our economic ties is gaining momentum.”
According to data from the International Monetary Fund, the percentage of US dollars in official foreign currency reserves hit a 20-year low of 58% in the fourth quarter of 2022 and 47% when corrected for exchange rate fluctuations.
The dollar continues to rule international trade, nevertheless. Nearly 90% of all worldwide FX transactions involve it on one side.
