But the BRICS would not even need to trade only with each other. Because each member of the BRICS grouping is an economic heavyweight in its own region, countries around the world would likely be willing to do business in the bric.
A preview of something like the absolute worst-case scenario that could befall consumers in BRICS countries if their governments adopted “bric or bust” terms of trade comes from today’s Russia. American and European governments have prioritized Russia’s economic isolation. Nevertheless, some U.S. and European goods continue to flow into Russia.
As officials in BRICS countries grow increasingly emphatic about their desire to de-dollarize, with today’s Russia as an upper bound of how bad it could get, the risk-reward tradeoff of de-dollarization will look increasingly attractive.
To displace the dollar as a reserve currency among BRICS, the ‘bric’ would also need safe assets to be parked in when not in use for trade. Is it realistic to imagine the ‘bric’ finding these? Yes.
But assets denominated in the ‘bric’ would actually have characteristics likely to make them unusually attractive to foreign investors. Since the BRICS reportedly plan to back their new currency with gold and other metals with intrinsic value, like rare-earth metals, interest-paying assets denominated in the bric would resemble interest-paying gold.
That’s an unusual characteristic. It is one that could make the assets denominated in the ‘bric’ attractive to investors who want both the interest-bearing property of bonds and the diversifying properties of gold.
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The geopolitics among BRICS members is also thorny. But a BRICS currency would represent cooperation in a well-defined area where interests align. Countries like India and China may have security interests at odds with each other. But India and China do share an interest in de-dollarizing. And they can cooperate on shared interests while competing on others.
The ‘bric’ would not so much snatch the crown off of the dollar’s head as shrink the size of the territory in its domain. Even if the BRICS de-dollarized, much of the world would still use dollars, and the global monetary order would become more multipolar than unipolar. (Newsroom)