Suggestions that the BRICS group of emerging market powers establish their own currency to reduce their reliance on the dollar aren’t under serious consideration and never have been, South Africa’s finance minister said.
“No one has tabled the issue of a BRICS currency, not even in informal meetings,” Enoch Godongwana said in an interview on the sidelines of the bloc’s annual summit in Johannesburg on Thursday.
“Setting up a common currency presupposes setting up a central bank, and that presupposes losing independence on monetary policies, and I don’t think any country is ready for that.”
The bloc, which also includes Brazil, Russia, India and China, is evaluating other ways to reduce their reliance on the greenback, including trading directly in their own units and ensuring that the New Development Bank, which they established in 2015, adapts how it raises its funding.
By way of example, when South Africa trades with neighbouring Botswana, which isn’t a BRICS member, “We know the rate of exchange between the two currencies, “ Godongwana said.
“There is no reason why we can’t pay them in pula, and they pay us in rands.”
The finance minister welcomed a decision by BRICS to extend membership invitations to six more countries because it would give South Africa better access to bigger markets and deepen trade relations between the Global South.
Other highlights from the interview:
- “The Chinese themselves want their renminbi to be recognized as a reserve currency by the World Bank and International Monetary Fund, and if you are saying they must abandon that project, they will not be happy.”
- There is an incorrect perception that BRICS wants to develop an “anti-West “ or an “anti-Swift” payment platform.
- “There is a discussion by central bankers of how to facilitate payments between countries, assuming we use local currencies.