What is BRICS?
Brazil, Russia, India, China, and South Africa are together referred to as BRICS. The acronym BRIC (without South Africa) was created in 2001 by Goldman Sachs economist Jim O'Neill, who predicted that by 2050, the four BRIC economies would take control of the world economy. In 2010, South Africa was included on the list.
The BRICS countries function as an informal association that aims to advance economic cooperation among its members and elevate their political and economic stature around the globe.
The Expansion of BRICS
As mentioned earlier, four nations initially made up BRICS when it was founded in 2009, and South Africa joined the international organization at China's invitation a year later. Chinese President Xi Jinping argued for the expansion of the organization to make it a geopolitical challenger to the G7 at the beginning of this week. To join the alliance, 23 nations submitted applications. Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE) were the six countries chosen by the BRICS leaders. This is a big shift for a bloc that only recently recruited its only member 13 years ago. The extended organization would be considerably more diverse than the original BRICS, an acronym for nations with significantly disparate economic output and trading and investment partners.
How can BRICS Impact the Global Economy?
In an effort to lessen the impact of the US dollar on the worldwide economy, the BRICS group of developing countries are intending to increase the number of its members and introduce a new currency.
The US dollar, presently the reserve currency of the world, would suffer greatly from the growth of BRICS. In addition to being the preferred currency for several nations with foreign reserves, the US dollar is utilized in the majority of international transactions. The inclusion of additional rising economies would increase the US dollar's global power and lead to a more balanced multipolar world order. This extension might bring in nations like Mexico, Indonesia, Turkey, and others to ensure a more inclusive and representative forum for economic collaboration. The US dollar would have competition from the BRICS nations' own currency, which might lessen the US dollar's sway over the world economy.
A new international currency is required for a variety of factors. In the past few years, the US dollar has depreciated and has become more unstable. This has made it more challenging for corporations to conduct international business and for nations to devise strategies for their economies.
The necessity for a new global currency has also been brought to light by the Russia-Ukraine conflict. Sanctions against Russia by the US and its closest partners have made it challenging for Russia to conduct business with other nations. The global economy has suffered as a result, and it has also highlighted how fragile the US dollar-based system is.
A significant move towards a more multipolar global economy will be the introduction of a BRICS currency. It would give nations greater flexibility when dealing with to their currency reserves and make it harder for the US to utilize its financial clout to coerce other nations politically. The reserve currency of the globe is the US dollar. This indicates that it is the currency that is most frequently utilized for investment and trade on a global scale.
The price of several commodities, including oil and gold, is expressed in US dollars. The BRICS nations are trying to create a unified currency and boosting their usage of domestic currencies in an effort to lessen the impact of the US dollar. The BRICS nations have not yet specified a timeframe for the group's growth or the introduction of a new currency. But the fact that they have even considered taking these actions shows that the US dollar's hegemony is in jeopardy.
The following are some advantages of the BRICS Expansion Plan and the introduction of the BRICS currency:
Increased collaboration in the economy
The BRICS nations are collaborating to deepen their economic ties. Increasing business, investment, and development might result from this.
Dependence on the US dollar is lessened
The BRICS nations are making an effort to rely less on the US dollar. They might have greater influence over their own economies as a result, which would make them less susceptible to US economic policy.
Greater impact on the world economy
The BRICS nations are attempting to have a bigger impact on the world economy. For these nations, this might result in a rise in commerce, investments, and development.
The BRICS Expansion Plan and the introduction of a unified currency are large-scale initiatives. They might, nonetheless, have a major effect on the world economy. If these initiatives are successful, they might promote greater economic cooperation, minimize dependence on the US dollar, and boost the impact of the BRICS nations in the global economy
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