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Navigating economic waters: pondering currency prospects for BRICS nations and MENA region advantages in August 2023 BRICS meeting

By Vince Hooper - posted Tuesday, 8 August 2023

In this era of fluid global dynamics and economic uncertainties, the strategic contemplation of currency options has emerged as a pivotal consideration for nations seeking to fortify their economic bedrock and amplify their influence in the world arena. In a world where trade dynamics are evolving, financial frailties persistence has been observed with the 2023 banking crisis in US and Switzerland, and the quest for greater monetary autonomy resonates, the exploration of diverse currency arrangements gains ascendency.

At the forefront of these musings stand the BRICS nations - Brazil, Russia, India, China, and South Africa - a coalition engaging in discussions that might reconfigure the global fiscal tableau, ushering in fresh channels for economic cooperation and geopolitical finesse have closer currency cooperation on the BRICS meeting agenda in South Africa in August 2023. This comprehensive exposition embarks on an odyssey through the labyrinthine currency options pursued by BRICS, the allure of new affiliates joining the alliance, the nuanced merits and demerits enshrined within the theoretical construct of optimal currency regions, and the intriguing windfalls these currency initiatives might bear for the Middle East and North Africa (MENA) region.

BRICS' path through currency alternatives

Within the BRICS constellation reside a diverse set of economies, each tracing a unique path of development, economic composition, and geopolitical weight. Counteracting the stranglehold of established Western currencies - think the US dollar and the euro - the BRICS consortium has embarked on a voyage of contemplation over currency options. The overarching goal is to mitigate vulnerabilities stemming from overreliance on a solitary global reserve currency, potentially instating enhanced financial stability. This expedition entails envisioning alternatives that bestow upon these nations greater sway over their monetary policies and fortify their economic tenacity when faced with external tremors.


Among the spectrum of currency options unfurling, one proposal stands out: the creation of a collective currency or a weighted currency amalgam designed to smoothen trade settlements among BRICS members. This transformative stride could entail the birthing of a regional currency meticulously tailored to the idiosyncratic needs and ambitions of these nations. This currency could serve as a beacon of their united economic prowess and aspirations for augmented sovereignty in financial affairs. Alternatively, the probing of digital currencies or the broader adoption of national currencies in bilateral trade agreements mirrors the alliance's forward-looking stance, navigating global financial ebb and flow by embracing technological breakthroughs for amplified cross-border transactions and harmonized monetary policy maneuvering.

Affiliate allies and expanding horizons:

In the unfolding discourse of BRICS, a remarkable facet surfaces: the integration of affiliate nations into the coalition. This inclusion necessitates calculated strategic acumen, with prospective candidates encompassing countries that share economic synergy, geopolitical interests, or a blend of both. The entry of affiliate members holds the potential to amplify the collective clout of the coalition, generating a more diversified and influential bloc on the global platform. Nevertheless, any expansion of the BRICS assembly requires a nuanced equilibrium to ensure that the unity of objectives and the concurrence of interests remain untarnished.

Pondering hegemony

In the realm of impending affiliate inclusions, the specter of supremacy looms large. The preeminent member within an expanded BRICS alliance would conceivably be the nation wielding the most substantial economic and geopolitical leverage. This dominance could materialize as shaping policy agendas, propelling pivotal verdicts, and steering a significant sway over the collective endeavors of the alliance. While maintaining an aura of equitable participation among affiliate members remains pivotal, it's plausible that the original BRICS constituents, especially China and Russia given their economic and geopolitical heft, might exert a more pronounced influence, potentially guiding the course of policy formulation and strategic trajectory.

Balancing act: upsides and downsides through the optimal currency area prism

In the intellectual domain, the theoretical edifice of the optimal currency area (OCA) - credited to economist Robert Mundell - furnishes a conceptual scaffold to dissect the merits and demerits of adopting a unified currency within a cluster of nations. The merits are manifold: diminished exchange rate volatility, elevated price transparency, and deepened trade interlinkages. Yet, the OCA theory underscores prerequisites for optimal currency domains, including synchronized economic cycles and mechanisms for fiscal transfers to mitigate economic disequilibria.

The application of the OCA paradigm to the BRICS narrative unveils a rich tapestry of complexity. The BRICS nations, while united in their pursuit of alternative currency arrangements, showcase substantial economic heterogeneity, casting shadows on the feasibility of achieving the requisites for a seamless currency coalition. Moreover, the paucity of established mechanisms to address economic disparagements could potentially erode the efficacy of a common currency endeavor.

Glimmers of MENA advantages

The reverberations of BRICS' currency contemplations cascade beyond the alliance's confines, casting their shadows upon the MENA expanse. Collaboration with BRICS initiatives could unfurl a bouquet of boons for MENA nations. Primarily, veering away from traditional Western currencies might cultivate enhanced monetary self-reliance, insulating MENA economies from the aftershocks of external currency convulsions. Secondly, fortified economic entwinements with BRICS constituents could chart a course for diversification of trade and investment allies, thereby diluting dependency on a circumscribed set of partners. This diversification could erect a bulwark against economic susceptibilities stemming from overdependence on a solitary trading associate. Lastly, a judiciously structured currency alignment with the BRICS consortium might catalyze deeper regional harmonization within the MENA sphere, fostering stability and unlocking latent economic potential.



In culmination, the BRICS alliance treads a juncture of paramount significance, as it contemplates currency alternatives that could potentially reconfigure the skeins of global finance. The inclusion of affiliate members adds an intriguing dimension to these deliberations. The lens of the optimal currency area theory illumines both the promises and pitfalls that lie ahead. Meanwhile, the MENA realm observes these developments with rapt attention, envisaging prospective dividends in forging tighter bonds with the BRICS collective. As dialogues mature and verdicts crystallize, the repercussions for the global economic order are poised to be seismic, and the trajectory of international finance might well traverse a transformative course. The BRICS nations stand on the brink of reshaping their roles in the global financial landscape through innovative currency pursuits, affiliate entrants, and plausible boons for regions like MENA. These unfolding events merit unwavering scrutiny as they transmute and mold the tapestry of global finance's future, potentially tilting the balance of economic dominion and refashioning the contours of the global monetary stage. It will be interesting to see what type of consensus emerges from the August 2023 BRICS meeting in South Africa.


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About the Author

Dr Vince Hooper is an associate professor at the Prince Mohammad bin Fahd University, Saudi Arabia.

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