BRICS unlikely to commit to giving up idea of common currency: Sources

“At the last BRICS Summit in Kazan in October 2024, many participants, including founding members, new members and even invited countries, were enthusiastically talking about an alternative to the US dollar. Over-dependence on the dollar has caused problems, including indebtedness for many countries, particularly lower income countries in the global south,” a source closely tracking the development told businessline.

Despite tariff threats by Trump, it is unlikely that BRICS members will offer any commitment on giving up plans for de-dollarisation or a common currency, although a BRICS currency is a distant possibility at present and needs a lot of work, the source added.

The next BRICS sherpas meeting, which may take place in early 2025 in Brazil, could throw greater light on the matter as more discussions are expected on plans announced at Kazan on de-dollarisation, the source said.

Soon after Trump’s post, External Affairs Minister S Jaishankar said that India has never been for de-dollarisation and right now, there was no proposal to have a BRICS currency. “The BRICS does discuss financial transactions…the US is India’s largest trading partner. We do not have any interest in weakening the dollar at all,” he said.

Reserve Bank of India (RBI) former governor Shaktikanta Das stated around the same time that while India was not pursuing de-dollarisation, the recent measures aimed at promoting transactions in domestic currencies was designed to mitigate risks in Indian trade.

The BRICS currency, being envisaged, is a notional currency and not a physical currency like the dollar, and it was not clear if Trump understood this, the source said. The concept is called the ‘benchmarking currency’, as it is a reference currency. “Having a physical BRICS currency is next to impossible as for that you need harmonisation of fiscal polities and also monetary policies as things like debt to GDP ratio need to be harmonised too. This is not possible in BRICS as there is a lot of variation amongst members economies. But benchmarking currency is easily achievable,” the source explained.

Benchmarking currency will indicate the value of a product moving in the BRICS bloc as it will be benchmarked with a BRICS currency value. “Now the BRICS currency value perhaps will be determined by stronger economies like China, India and Brazil….only a few currency basket that will form the BRICS currency. That has to be discussed by the taskforce set up for it,” the source said.

At the Kazan summit, the bloc announced plans that may advance de-dollarisation through multiple strategic projects and initiatives including facilitating trade in local currencies, exploring a common payments infrastructure, and developing a BRICS grain exchange.