Aimed at breaking the dominance of the United States Dollar on global finance, Brics, an intergovernmental organisation could come out with an alternative to the US Dollar in its meeting scheduled for 22 to 24 October 2024 in Kazan Russia, as per the media reports. The meeting is expected to introduce a multicurrency payment platform along with a roadmap for a gold-backed BRICS trading currency.
As an alternative to the current dollar-centric global financial system, the bloc’s meeting which is to be attended by every member is considering a blockchain-enabled payment system that uses a digital asset called the Unit. Based on the Unit white paper, each Unit would be backed by a reserve basket with certain characteristics, as shared on LinkedIn by Ritesh Jain, Founder, Pinetree Macro.
As per the reports, the reserve basket is expected to include 40 per cent gold and 60 per cent of the balance is to be made up of participating Brics currencies which are convertible in gold. De-dollarisation involves a process of substituting the US Dollar as the currency used for trading commodities and other goods and services.
As far as the domination of the US Dollar is concerned, the 1944 Bretton Woods agreement established the postwar global financial system. Under Bretton Woods, the dollar was tied to the fixed price of gold while all other currencies were pegged to the dollar. Nations with dollar-denominated trade surpluses could exchange their dollars for gold with the US central bank at the so-called gold window.
The media reports have also stated that while a BRICS common currency could some time to come out, China is working with several other countries on mBridge which is a blockchain-based platform that accommodates financial transactions in multiple currencies.
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