Yuan and R5: How BRICS Are Transforming the Global Monetary System

In 2024, the Chinese yuan overtook the euro in international settlements. BRICS are pushing for de-dollarization, strengthening the yuan and discussing the creation of a new R5 currency and a gold-backed stablecoin.

According to the latest data from the SWIFT interbank payment system, the Chinese yuan overtook the euro to become the second most used currency in international settlements in April 2024. In June, the share of yuan settlements increased by 13.37%, strengthening its position in the global market. This reflects the trend of BRICS countries to reduce the influence of the US dollar and euro, which is helping to increase the popularity of the yuan and other local currencies.

Following the US imposition of sanctions on Russia in February 2022, China has stepped up its push for de-dollarization, which poses a threat to the dominance of the dollar and euro. US Treasury Secretary Janet Yellen confirmed that sanctions have accelerated the de-dollarization process in BRICS countries. China continues to persuade developing countries to switch to settlements in national currencies, including the yuan, which strengthens its position in the global market.

Central banks around the world are actively increasing their gold reserves. A record 483 tonnes of gold were purchased in the first half of 2024, up 5% from the previous record set in the first half of 2023.

An expert group created under the Russian presidency of BRICS proposed an initiative to create a new unit of account called R5 (reflecting the fact that inAll currencies of the five original BRICS members in English begin with the letter R), which will be based on a basket of currencies of the participating countries. This initiative was developed in 2024 and is planned for further improvement during Brazil's presidency of BRICS in 2025. It is assumed that the R5 unit of account can be transformed into a full-fledged international currency for mutual settlements between BRICS countries.

At the same time, the possibility of creating a gold-backed stablecoin by the BRICS countries is being discussed, which could further increase demand for gold and weaken the position of the US dollar in the global market. Despite this, Bitcoin continues to show high returns, although central banks still prefer more stable assets such as gold.

Thus, against the backdrop of de-dollarization and the strengthening of the yuan and gold, the US dollar and euro face new challenges from the BRICS countries and their efforts to create a multipolar financial system.

Author's opinion: information about a new unit of account called R5 was announced back in March 2024. But if you look at how all the processes in BRICS have accelerated, then it is quite possible that in October in Kazan we will hear about the creation of such a unit. Let me remind you that testing of the digital ruble begins on September 2. In addition, testing of the state cryptocurrency, sometimes called “cryptocoin”, begins on September 2.

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