YEVGENY GORYUNOV: “BRICS OWN CURRENCY IS AN UNREALIZABLE IDEA”

Sergei Lavrov, Foreign Minister of the Russian Federation has declared that the initiative to create a BRICS currency will be discussed at the BRICS summit in South Africa in August. In Yevgeny Goryunov’s opinion, it is necessary to comply with a few conditions to create a new currency, that is, the establishment of a single regulator with a subsequent transfer of trade contracts and settlements within the countries to a new currency. Potentially, with switching over to a new payment instrument, the member-countries’ expenses on trade operations will decrease substantially. However, a new currency is an unrealizable idea, Yevgeny Goryunov believes:

“The first story is about a more or less homogeneous structure of the economy, but it does not exist. Second, it is desirable for countries participating in this process to be comparable in economic terms. But take China, for example. We can say that all other countries are comparable with China only if they are taken together. Third, it is necessary to establish a supranational authority dealing with monetary regulation. In other words, BRICS countries will need a single central bank and it is important to determine how it is to be governed and how voting rights and authorities are distributed between the participants. But all this does not exist, either. Further, if there is a single currency area, restrictions on capital flows should be lifted, otherwise, problems may arise, too. It would be interesting to see how India is going to settle the foreign exchange control issue with China,” Yevgeny Goryunov concludes.