The BRICS: A Challenge to the Established Monetary Order.

Originally Posted: Publish0x



The BRICS was created to form an economic and political alliance between Brazil, Russia, India, China and South Africa (+40% of the world population in only these 5 countries). The main objective of the association is to create a much fairer and more balanced world system in relations between countries. For this reason, this organization has always sought to restructure the economic system, as some think the current one favors traditional Western nations. The term was coined in 2001 by economist Jim O'Neill, who predicted that these nations would dominate the world economy by 2050.


Since 2009, the BRICS have held annual summits to foster multilateral cooperation in various areas, such as trade, investment, energy, agriculture, culture and security. One of the bloc's objectives is to reduce dependence on the dollar and strengthen its own currencies in the international market. To this end, the BRICS have created alternative financial mechanisms to the International Monetary Fund (IMF) and the World Bank (WB), such as the New Development Bank (NDB) and the Contingency Reserve Agreement (ARC). These institutions seek to offer credit and assistance to developing countries without the conditionalities imposed by the organizations dominated by the United States and Europe.


In addition, the BRICS have promoted the use of their local currencies or those of third countries to carry out bilateral or multilateral transactions, thus avoiding the intermediation of the dollar. For example, China and Russia have agreed to trade in yuan and ruble, respectively. Likewise, Brazil and Argentina have proposed to South Africa to use the yuan instead of the dollar for bilateral trade.


These new alliances could be the preamble to how the international monetary system is undergoing profound changes that can alter the economic and political balance between nations and that the dollar is losing ground against the yuan and other currencies. Which brings us to the reality that the future of the international monetary system remains very complex and uncertain and depends on several factors, such as the economic and political evolution of the United States and China, cooperation or confrontation between world powers, innovation technological and financial and the preferences of economic agents.


Some of the possible future scenarios could be:


📌 Continuity of the dollar as the hegemonic currency: this scenario assumes that the United States manages to maintain its economic and political leadership against China and other rivals, that the dollar continues to be the most demanded and accepted currency in the world and that there are no significant changes in the international monetary order.


📌 Transition towards the yuan as the hegemonic currency: this scenario assumes that China surpasses the United States as the world's leading economy, that the yuan becomes the most widely used and recognized currency in the world, and that there is a radical change in the monetary order international.


📌 Emergence of a multipolar monetary system: this scenario assumes that no currency manages to impose itself as hegemonic, that several currencies coexist as references in different regions or sectors, and that there is greater diversification and competition between currencies.


📌 Appearance of a supranational or digital currency: this scenario assumes that a new currency is created that does not depend on any country or entity, that has global coverage and that is based on technical or agreed criteria. This currency could be an extension of the IMF SDR or a cryptocurrency such as bitcoin 💖.


The boost that the BRICS is giving to the use of their local currencies or those of third countries could be the beginning of the end of the US dollar as the dominant currency and will have consequences, in one way or another, positive and negative, on the economy of all the countries of the world (without exception).



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