The 16th Annual 2024 BRICS Summit - Kazan, Russia | Bulk Bullion

Since its inception 15 years ago, Russia has aimed to strengthen BRICS as a more cohesive and influential entity. Despite the diverse makeup of its membership and the limited achievements of its institutions thus far, BRICS has endured and expanded. However, it remains uncertain whether Russia will succeed in one of its primary objectives: establishing an alternative international financial system to challenge the current Western-dominated framework.

Nevertheless, Putin recognizes that Russia can benefit from the desire of what he terms the “world majority” countries to assert their interests independently of the West. BRICS serves as a vital platform for these nations to pursue that goal.

Key topics expected to be addressed at the summit include economic cooperation, trade agreements, and the challenges faced by BRICS members, such as geopolitical tensions, the global economic slowdown, and climate change.

More Bark than Bite?

For years, Western policymakers have largely viewed BRICS as more symbolic than substantive. The bloc has sought to create an alternative to Western dominance in the global financial system but has not succeeded. It has not redefined international trade rules, a common BRICS currency has not materialized, and its alternative payment systems have made little impact on the U.S. dollar’s global supremacy.

However, underestimating BRICS would be a mistake—particularly given the political significance of the upcoming meeting in Kazan, Russia. Who could have imagined that just two and a half years after his aggressive invasion of Ukraine, Russian President Vladimir Putin would host a summit attended by numerous countries, including U.S. allies like Egypt and NATO member Turkey, which has recently shown interest in joining?

Trading Between BRICS Nations

In terms of trade, BRICS has yet to establish its own trade regime or institutions, but emerging trends indicate its growing influence. For instance, China has developed an alternative to the SWIFT payment system, albeit limited in scope, while countries like Turkey and Brazil are increasingly converting their dollar reserves into gold. The idea of currency swaps for energy transactions is also gaining traction, suggesting a desire for greater financial autonomy from the West.

Gold Backed BRICS Currency

All attention is now on the upcoming 2024 BRICS Summit scheduled for October 22 to 24 in Kazan, Russia. The BRICS nations are expected to continue discussions on creating a potentially gold-backed currency as an alternative to the U.S. dollar.

This proposed BRICS currency would empower these nations to assert their economic independence while competing with the existing international financial system, which is heavily dominated by the U.S. dollar, accounting for about 90 percent of global currency trading. Until recently, nearly all oil transactions were conducted in U.S. dollars; however, reports indicate that in 2023, one-fifth of oil trades were carried out using currencies other than the dollar.

While it may still be premature to predict the launch of a BRICS currency, now is an opportune moment to consider its potential and the implications it could hold for investors.

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