“The modern world is clearly not enough of the dollar, euro and pound sterling. For now, $1 = €1. Keep savings in rubles!,” said Dmitry Medvedev.
Dmitry Medvedev has said a new reserve currency should be created to take on the dominant US dollar and transition from the “rotting” Euro.
The ex-Russian President and deputy chairman of the Security Council of Russia posted a lengthy message on Telegram detailing that the Euro is weakening amid sanctions imposed on Russia.
Earlier this week it fell below $1 for the first time in 20 years to $0.9998 but according to Medvedev it’s not worrying Russia because their alliance with Brazil, China, India and South Africa could produce a new currency that would replace both the Euro and Dollar.
“We need to deal with the adaptation of our economy to the new very difficult conditions. Solve problems in industry, including securing technological sovereignty,” he said.
“And the best protection against the rotting Euro will be the transition to new payment methods in trade with our reliable partners, including the use of national currencies – the Russian ruble, Chinese yuan, Indian rupee, etc.
“In the future, it is also possible to create a new reserve currency of the BRICS countries.”
While the Euro is expected to weaken even more, the US dollar is surging at the moment after the US Federal Reserve hiked interest rakes by 1.75 per cent and is expected to reach 3.4 per cent by the end of 2022, however the introduction of a new global currency could be competition for the US dollar.
According to Statista, in 2021, BRICS had a total GDP of US$24.44 trillion, more than the United States who had about US$23 trillion.
However, the number could soon rise for BRICS after Iran and Argentina recently applied to join the group of emerging economies while President of the BRICS International Forum has suggested Turkey, Egypt and Saudi Arabia are looking to join.
“All these countries have shown an interest in joining and are preparing to apply for membership. I think this is a good step, because expansion is always perceived positively; this will clearly increase the influence of BRICS in the world,” said Purnima Anand.
However, ING Global Head of Markets and Regional Head of Research for UK & CEE Chris Turner said at this point, he doesn’t believe that a new BRICS currency could outperform the US dollar.
“While there could be some high-profile statement of political ambitions to embark on this project, we doubt the mercantilist nations involved in BRICS would want to transfer valuable FX reserves into this more local sphere of influence.”
