Over the past month, the Russian ruble has fallen 16.48% against the US dollar as energy and commodity prices have slowed in recent weeks. The Central Bank of Russia announced two weeks ago that it is further distancing itself from dependence on the US dollar by buying the Chinese yuan in the foreign exchange markets. Around the same time, on December 21, 2022, Sberbank board member and Russian International Affairs Council (RIAC) member Yaroslav Lissovolik published an opinion article about exploring the path to a new BRICS reserve currency.
Russia’s central bank is trying to reduce dependence on the US dollar by buying the Chinese yuan
In late July, Bitcoin.com News reported on the BRICS nations’ plan to create a new reserve currency, after Russian President Vladimir Putin announced the plan at the BRICS summit in June. While the topic was topical at the time, the reserve currency BRICS stopped being talked about for a while. A few months later, in October 2022, best-selling author, Rich Dad Poor Dad, Robert Kiyosaki discussed the issue, noting that the US dollar was a “toast.” Energy prices and commodities have fallen in value over the past 30 days, but some economists expect oil prices to rise by $200 a barrel sometime in 2023.
BRICS stands for the union of Brazil, Russia, India, China and South Africa. A paper published in the International Journal of Innovation and Economic Development entitled “The BRICS Nations and Their Priorities” states that the five nations together have a nominal GDP of $16.039 trillion.
While energy and commodity stocks have fallen, the Russian ruble has also fallen against the greenback. Statistics show that the ruble has lost 16.48% against the US dollar in 30 days, but five-day indicators show that the ruble is up 1.72%. Year-to-date statistics show that the Russian currency has appreciated by 5.37% over the past 12 months. Meanwhile, Portal reported in late December 2022 that in 2023 Russia will start buying Chinese yuan in the foreign exchange market. Reporter Elena Fabrichnaya said Moscow’s move was cited by two sources and that it opens a “new front in an accelerated de-dollarization drive aimed at reducing its dependence on Western finance.”
Sberbank analyst discusses possibility of BRICS reserve currency complementing national currencies
The previous day, December 21, 2022, Yaroslav Lissovolik, a member of the Russian International Affairs Council (RIAC) and head of the analysis department at Sberbank, published a blog post entitled “Exploring the Pathways”, in which he discussed the proposed BRICS reserve currency . Following Russian President Putin’s remarks at the BRICS summit, Lissovolik said that the “BRICS reserve currency has acquired special importance in recent months”. The analyst explained that there have also been recent laws and debates about the “advisability of creating a new reserve currency.”
Lissovolik cited the recent discussion on the BRICS reserve currency at the 8th BRICS Parliamentary Forum. At the event, Federal Assembly Speaker Valentina Matvienko suggested that BRICS lawmakers should start concrete measures to strengthen countries’ economies. Matvienko highlighted specific initiatives including the new international reserve currency and the development of better settlement procedures within the BRICS countries. Lissovolik’s blog post also compared the new BRICS reserve currency idea to the 2018 Valdai Club concept of the R5 currency, a name meaning the letter “R” for the five currencies: real, ruble, rupee, renminbi and rand.
Lissovolik explained that a new BRICS reserve currency will not be created to replace the national reserve currencies used by individual nations, but to “complement those national currencies”. The Sberbank analyst said a brand new reserve currency could have a “transformative effect on the international financial system” as he believes there is a “noticeable shortage of reserve currencies” in the global economy.
“Importantly, given the huge potential for de-dollarization, the scope for deploying the new reserve currency in the global economy is substantial,” concludes Lissovolik’s blog post. “The new BRICS reserve currency can act in line with the increased role of national BRICS currencies to take a larger share of the overall pie of currency transactions in the global economy.”
Tags in this article Brics, BRICS National Currencies, Chinese Yuan, Commodity, Forex Market, Dedollarization, Economy, Elena Fabrichnaya, Energy, Federal Assembly, International Financial System, Legislation, National Currencies, OIL, Parliamentary Forum, R5 Currency, Rand, Real, Renminbi, Reserve Currencies , Reserve Currency, Ruble, Rupee, Russia, Russian International Affairs Council, Sberbank, Settlement, US Dollar, Valentina Matvienko, Vladimir Putin, Yaroslav Lissovolik
What do you think of the Sberbank analyst editorial about a new BRICS reserve currency? Share your thoughts on a potential new BRICS reserve currency in the comments section below.
Jamie Redman
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