“There appears to be broad acceptance that the concept is sound,” says Chris Devonshire-Ellis, chairman of Dezan Shira & Associates, who has over 30 years of investment experience in Russia, China, and other Asian markets.
Right Place, Right Time
“This seems a logical response,” he said. “The main drivers are to do with an overall belief that the United States has become both unreliable and overbearing in its foreign policy. Unreliability such as issues concerning the recent US debt ceiling [drama] – which has only been pushed back to the end of the year – and the risks of sanctions. Overbearing in that it has used international mechanisms to punish countries it doesn’t agree with (cutting countries off SWIFT) and has appeared to use the G7 as an economic ‘gang’ to support and justify what it does elsewhere.”
Alternative, Not Competitor
Architecture: How Will a BRICS Currency Get Off the Ground?
The investor expects the BRICS currency’s initial global impact to be “minimal,” as most countries will continue to use dollars in trade. “It won’t initially be huge as part of the total” of even intra-BRICS countries’ trade, he said, estimating that among the 20 percent of global GDP represented by intra-BRICS trade, the new currency could initially make up about 10 percent of that, or 2 percent of the world total.
Euro as a Blueprint?
“There are, of course, a number of obstacles that present themselves to the establishment of such a currency, which I think will be overcome in the next while. The logistics or the technicalities around the BRICS currency need to be ironed out. It is achievable in the next five to ten years, but it would require very serious commitment,” not just from the current BRICS countries, but nations that have applied to join, Surve said.