Germany has embarked on a bold initiative aimed at challenging the established dominance of BRICS (Brazil, Russia, India, China, and South Africa) currency in the global economic landscape. The focal point of this audacious move is the introduction of the Digital Euro, a groundbreaking digital currency set to revolutionize the financial sector.
As Germany positions itself at the forefront of this technological and economic transformation, the world watches with keen interest to assess the potential impact on the balance of power among major economies.
Germany’s masterstroke to challenge BRICS currency
The BRICS alliance intends to introduce a new currency to the global currency market in order to compete with the U.S. dollar and the euro. A former advisor to the Russian president, Sergey Glazyev, verified early this month that the BRICS currency is “almost ready” for introduction.
According to reports, the alliance could launch the currency at its sixteenth summit in 2024. This development aligns with Germany’s strategic intention to challenge rival currencies in the market by developing a digital Euro.
Legislators throughout Europe, not just in Germany, are attempting to establish national digital currencies in order to adapt to the shifting financial landscape. While over 150 countries are currently developing CBDCs, only a few have launched pilots as of this year. This article will examine whether Germany intends to introduce CBDC as a counterbalance to the forthcoming BRICS currency.
European legislators appear to be opposed to the Germany digital Euro, and the CBDC may not contest the BRICS currency. A digital Euro is not supported by all of Europe, and the European Union is divided regarding the creation of a CBDC.
Although a small number of EU member states support the CBDC, the rest have expressed interest in the notion that a digital currency is unnecessary.
Reports have it that failure by the United States, Germany, and the European Union to counter the BRICS currency after its introduction could prove disastrous for the West.
When will BRICS launch their currency?
Brazil’s President Lula presented a bold proposal during the BRICS summit on August 23, 2023. He urged the BRICS members to work together to develop a unified currency designed for intra-group trade and investment.
This plan seeks to protect these countries against the risks posed by US dollar exchange rate variations. While the concept has gained support, it confronts a number of obstacles.
While the West is divided on the prospects of CBDCs, the BRICS bloc has accelerated the development of its expected currency. BRICS could issue its own currency before the digital Euro is available on the international market. The initiative puts the BRICS currency ahead of the digital Euro, US dollar, and other major global trade currencies.
Furthermore, Lula has previously advocated for the Mercosur region to adopt a shared currency. Mercosur is a South American trade bloc. According to Lula, a BRICS currency gives an opportunity to “increase our payment options and reduce our vulnerabilities.” It’s a powerful argument in an era of global economic uncertainty.
Russian President Vladimir Putin first proposed the BRICS idea for a worldwide reserve currency in 2022, challenging the US dollar’s role as the world’s reserve currency. The planned BRICS currency would be gold-backed.
Russia and China are also de-dollarizing their economies by diversifying their foreign currency holdings and boosting their gold investments. The de-dollarization activities of Russia and China will have far-reaching consequences for the United States and the global financial system.
In part, BRICS currency considerations are motivated by apprehensions regarding the dollar’s continued preeminence in international finance and commerce. The dollar has strengthened as a result of recent incidents, including interest rate increases by the US Federal Reserve and geopolitical tensions, including Russia’s invasion of Ukraine.
Other nations incurred higher-priced imports and dollar-denominated debt due to these events.
