South African Official: Common Currency Requires Central Bank, Threatens Monetary Policy Independence

South Africa’s minister of finance has defined why he believes that no nation is prepared for a standard foreign money, together with a unified BRICS foreign money. “Setting up a common currency presupposes setting up a central bank, and that presupposes losing independence on monetary policies, and I don’t think any country is ready for that,” he emphasised.

‘I Don’t Think Any Country Is Ready for That’

South Africa’s Minister of Finance Enoch Godongwana talked in regards to the prospect of making a standard foreign money in an interview on the sidelines of the BRICS financial bloc’s annual summit in Johannesburg on Thursday. South Africa was the host of this yr’s BRICS summit.

Despite widespread expectations of the BRICS nations asserting the creation of a standard foreign money, potentially backed by gold, he confused that “No one has tabled the issue of a BRICS currency, not even in informal meetings.” The official continued:

Setting up a standard foreign money presupposes organising a central financial institution, and that presupposes shedding independence on financial insurance policies, and I don’t assume any nation is prepared for that.

The BRICS nations (Brazil, Russia, India, China, and South Africa) introduced on the conclusion of the summit that six countries have been invited to affix as new members, with their inclusion set to start on Jan. 1, 2024. The six nations are Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE).

One of the important thing matters extensively deliberated on on the BRICS summit was using native currencies in worldwide commerce and monetary transactions, somewhat than counting on the U.S. greenback.

Godongwana acknowledged that when South Africa trades with Botswana, for instance, “we know the rate of exchange between the two currencies,” emphasizing that “There is no reason why we can’t pay them in pula and they pay us in rands.”

In their declaration, launched on the conclusion of the summit, the BRICS leaders pushed for using native currencies. “We stress the importance of encouraging the use of local currencies in international trade and financial transactions between BRICS as well as their trading partners,” their declaration states.

What do you consider the statements by South Africa’s Minister of Finance Enoch Godongwana in regards to the creation of a standard foreign money? Let us know within the feedback part beneath.