PODCAST | Is SA ready for a Brics currency?

The establishment of a Brics currency, what it could mean for SA and for global trade, is the focus of this edition of the Business Day Spotlight.

Our host Mudiwa Gavaza is joined by Xhanti Payi, a senior economist at PwC.

The Brics countries — Brazil, Russia, India, China and SA — have stepped up efforts to launch a common currency in an attempt to ditch the US dollar and push back against America’s dominance.

Volatile times in recent history such as the global financial crisis of 2008, the Covid-19 pandemic and now a war in Europe have amplified calls from some to end or disrupt the place of the US dollar as the world’s reserve currency, a position it has held since after World War 2. In such volatility people turn to the dollar as a trusted store of value and stability, which is a trend seen by detractors as adding to its power and/or influence.

Such calls were amplified this week when Brazilian president Luiz Inacio Lula da Silva called on Brics nations to come up with an alternative to the US dollar for foreign trade.

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Payi explains that SA finds itself in a difficult place, being part of two trading blocs — Brics and the Africa Free Trade Area — that are each mulling creating their own currencies. SA would therefore have to choose one of these options if it were to commit to a common currency.

This is in addition to the myriad of trade and policy challenges that the country would have to consider before making such a move.

The Brics countries have come up with a framework for providing protection against global liquidity pressures. This includes currency issues where members’ national currencies are being adversely affected by global financial pressures.

Topics of discussion include: what would the establishment of a Brics currency mean for SA; whether the world is ready for such a currency; trade and policy considerations; and disruptions to global trade.

Business Day Spotlight is a TimesLIVE Production.