BRICS nations discussing introduction of single currency to ease trade, says Russian envoy

The amalgam of five major emerging economies- Brazil, Russia, India, China and South Africa (BRICS) is conferring upon the prospect of creating a single currency. The revelation was made on Thursday by Pavel Knyazev, the Ambassador-at-Large of the Russian Foreign Ministry, Sous-Sherpa of Russia in BRICS, reported Sputnik.  

"The possibility and prospects of a common single currency, the BRICS-based accounting currency, is being discussed," Knyazev stated during an expert discussion on the prospects for the expansion of the BRICS and the Shanghai Cooperation Organization (SCO). The discussion was hosted by the Valdai Club, a Moscow-based think tank and discussion forum that is closely associated with President Vladimir Putin.  

Previously, Tehran had proposed creating a new single currency to facilitate the trade between members of the Shanghai Cooperation Organization.  

Iran’s proposals for the SCO  

Iran's Foreign Minister for Economic Diplomacy, Mehdi Safari had earlier announced the request in July, proposing that the group’s nine-member nations introduce a new common currency to facilitate trade.  

The roots of Iran’s proposal lead back to September 2021. Reportedly, the proposal aimed to gradually transition to mutual settlements through national currencies in order to develop SCO members’ financial cooperation and act as a bulwark against US sanctions, a Sputnik report states.  

Relevance of ‘single currency’ proposals  

“By extending local currency settlements, SCO countries would lower the risk of being punished by the US via financial means, such as freezing US dollar assets involved in SCO countries' trade," the director of the Finance and Securities Institute of Wuhan University, Dong Dengxin had stated, reported Sputnik.  

Together, the nine member countries of the SCO include approximately 60% of the area of Eurasia and 40% of the world’s population. Having a single currency to conduct business between the member nations would greatly ease trade.  

Moreover, other members of the SCO are also targets of economic sanctions by the United States, states Sputnik. Russia, being in the limelight after Putin’s announcement to launch a special military operation in Ukraine on 24 February, has continuously faced economic sanctions from the US and EU nations. Meanwhile, Moscow looked towards its Asian partners, especially China and India, who eagerly bought Russian gas and coal exports in spite of threats of being sanctioned by the US.  

Formed in 2006 to enhance cooperation between the member nations, BRICS is an informal association of the world's major developing economies. Another purpose of the association is to elaborate common approaches to global economic challenges.  

BRICS member nations represent around 40% of the global population and around a quarter of the global GDP.