Russia's Deputy head of Security Council asserts BRICS can create its own reserve currency

Dmitry Medvedev, deputy he of Russian Security Council, stated on July 12 that BRICS group, which comprises Brazil, Russia, India, China and South Africa, might establish a new common reserve currency. Dmitry Medvedev's remarks came after Euro and Dollar became nearly equal in value, approaching a one-to-one exchange rate.

" best protection against rotting euro will be transition to new payment methods in tre with our reliable partners, including through use of national currencies – Russian ruble, Chinese yuan, Indian rupee, etc. In future, it is also possible to establish a new reserve currency of BRICS countries. dollar, euro, and pound sterling are clearly not enough for modern world,"  Russian Security Council's deputy he wrote on Telegram.

BRICS nations are presently working to establish a new global reserve currency, according to Russia's President Vlimir Putin. He furr ded that member nations are also creating trustworthy substitute mechanisms for cross-border payments. In a bid to reduce reliance on Western financial system, group h earlier stated that it was working to establish a joint payment network. ditionally, BRICS nations have increased use of domestic currencies in cross-border tre.

" issue of creating an international reserve currency based on a basket of currencies of our countries is being worked out," Putin said.

Why US dollar is used for international transactions?

US dollar is used by nations for international transactions because it is a stable currency that is easily convertible everywhere in world and because commodities like oil are priced in dollars. BRICS currencies aren't thought to be fully convertible. Chinese yuan is an International Monetary Fund (IMF) reserve drawing rights (SDR) currency, officially making it an international currency, but even yuan has limited convertibility.

In dition to dollar's strength and convertibility, central banks around world hold U.S. dollars as a significant portion of ir foreign exchange reserves due to dollar's value in settling international tre. Or countries do not want to hold reserves in South African rand, Brazilian real or Russian ruble because y are all relatively fragile currencies.

Image: AP