UNIT, the BRICS Currency: A Rival to the Dollar?

Throughout history, the world’s leading power has maintained its dominance through military and monetary might. While the United States has embodied this position for more than half a century, its power is waning under the weight of multiple wars, repeated sanctions, and an exponential increase in its debt, which now exceeds its GDP for the first time since 1945. As the center of the global economy gradually shifts from the United States to the Global South, and gold reserves follow suit, could a new hegemonic currency emerge to rival the dollar?

After centuries of a unipolar world order, we have definitively entered a multipolar one. The historic revolution in interest rates marked the end of globalization and the return of empires. If, in the world of tomorrow, no country, including China, intends to become the world’s leading power, the BRICS nations are nonetheless asserting their dominance. Not only is their share of global GDP and population higher than that of the G7 countries, but they also hold the bulk of the world’s reserves of raw materials, including oil, natural gas, minerals, and precious metals — all of which are essential for tomorrow’s growth drivers. Since the economy is nothing more than transformed energy, this situation gives them an unrivaled position. Thus, for several years now, the alliance’s member countries have been preparing to create a new international financial system. Their gold purchases in recent years are aimed not only at de-dollarization but also at securing a metal that allows them, during all end-of-cycle periods, to dictate the terms of a new monetary order. This is how the United States, by controlling nearly 80% of global reserves in the aftermath of World War II, was able to impose the dollar as the dominant currency worldwide, with the gold standard then in effect.

With the BRICS countries controlling more than half of global gold production and their reserves continuing to grow, the creation of a new international conference, modeled after Bretton Woods, is now more likely than ever. However, the possibility of a return to the gold standard does not appear to be on the table. In a world where growth has become the be-all and end-all of all global economies, the emergence of such a financial system is unlikely to suceed. Gold serves as a safe-haven asset and, thanks to its limited supply and intrinsic value, provides a stability that debt-based currency cannot. This is also one of the reasons why the member states of the alliance, which are significantly less indebted than Western countries (with the exception of China), are so interested in the yellow metal.

The idea of a single currency thus emerged as an alternative at the BRICS summit in Johannesburg in 2023. This currency, called UNIT, would be backed not by debt, but 60% by their national currencies and 40% by gold. Such a backing would facilitate its global adoption, as confidence in the dollar continues to wane amid the proliferation of wars that many countries have endured.

This initiative addresses several shared goals. The BRICS nations aim to accelerate the world’s de-dollarization and no longer be subject to the threat of sanctions, as Russia and Iran still are today. However, just like gold — which by its very nature eludes the control of any state — the UNIT would offer issuing countries definitive liberation from American dominance. This is similar to the alternative network to the SWIFT system, known as the BRICS Bridge, and the New Development Bank, a financial institution competing with the IMF and the World Bank. These new powers, formerly developing countries, also remember the “lost decade” of the 1980s caused by the United States, when the Fed’s sharp rise in interest rates following the second oil shock triggered a debt crisis in many of these countries, particularly in Latin America.

The UNIT would also simplify their gold purchases and thus increase their reserves in the face of international conflicts and instability.

At the same time, it would encourage investors around the world to invest in their government bonds, thereby attracting more capital while shifting away from U.S. Treasury bonds. Finally, it would serve, starting today, to strengthen trade between them and reduce the exchange costs between their local currencies and the dollar.

However, several major obstacles have emerged. First, the economic, financial, and geopolitical interests of these countries are highly divergent. China and India, for example, already in conflict over territorial issues, hold opposing views on numerous topics, particularly regarding their relations with the United States. The same applies to their respective positions on the war in Ukraine, in Iran, etc. Furthermore, these countries are spread across four different continents. In fact, all single-currency projects have been designed for states within the same geographic region, whether in Latin America with the Mercosur countries, in Asia with the Association of Southeast Asian Nations, etc. The euro was made possible only by a shared history among its member states and a geographical proximity that makes the continent a free-trade zone. With a track record that is now well known.

The creation of a common currency would also require a complete abandonment of the dollar. However, for many of these countries, dependence on the U.S. financial system remains very strong at present, as some of them are indebted in dollars and the wealth of their elites is held primarily in U.S. currency. Furthermore, even if this situation is temporary, and while trade in local currencies continues to grow, the dollar’s hegemony persists — and even more so since the war in Iran: the dollar accounts for 57% of global reserves, more than 50% of global exports, and more than 60% of foreign-currency debt issuance. The transition from one monetary hegemony to another is a slow process because it involves a complete shift in the balance of power. The sale of U.S. bonds, necessary for de-dollarization, also leads to currency depreciation for the selling country and thus a risk of imported inflation. In this regard, Donald Trump also announced last year that countries supporting a currency competing with the dollar would face 100% tariffs, which caused some countries, including Russia, to back down. Finally, this currency must be issued by a common central bank. However, while the New Development Bank could play this role, it would require each country to agree to abandon its monetary policy. Given that some of these countries’ central banks are not independent, this scenario remains unlikely.

At last year’s BRICS summit in Rio, which focused on a new global governance framework, none of the countries raised the idea of a common currency. While their desire to end U.S. dominance remains unanimous, their willingness to relinquish their sovereignty in favor of a single currency is far less so. Behind the statements and publicity stunts, the facts speak for themselves. Before any project of this magnitude can see the light of day, the BRICS countries continue to turn to gold, which, now more than ever, is playing its historic role.