ATHENS – Last month’s BRICS summit in Kazan, Russia, was, like all summits, heavy on photo ops. And it yielded a second act that was similarly heavier on symbolism than substance: the release of a report by the Russian finance ministry and central bank on “improvement of the international monetary and financial system,” by which Russian officials obviously meant “finding an alternative to the weaponized dollar.”
Expressions of dissatisfaction with the dominance of the dollar over global money and finance go back at least to French finance minister Valéry Giscard d’Estaing in 1965, who famously lamented the greenback’s “exorbitant privilege.” Indeed, the desire for an alternative played no small part in the creation of the euro 34 years later.
Herein lies the rub for the BRICS (named for its founding members Brazil, Russia, India, China, and South Africa). Creating the euro took 34 years. It necessarily built on a half-century of other steps that deepened European integration and established shared political institutions. And the euro, in any case, has shown no signs of challenging the dollar, or even of modestly denting its global supremacy.
Policymakers in emerging markets have in fact offered a long list of possible substitutes for the dollar. None of their proposals has borne fruit. In 2009, People’s Bank of China (PBOC) Governor Zhou Xiaochuan suggested replacing dollar reserves with the International Monetary Fund’s Special Drawing Rights. It quickly became apparent that no one was particularly interested in holding, much less using, an artificial asset pegged to an arbitrary currency basket.
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