Later this month, New Delhi is expected to host the fourth annual summit of the leaders of BRICS nations. For the uninitiated, the S in BRICS stands for South Africa, the other four being already well known we suppose. Coming back to the summit, looks like the group means some serious business this time around. Amongst the many ideas doing the rounds, the one that sounds quite promising is the idea of the member nations trading with each other in their own currencies. Clearly, the advantages of such an arrangement are manifold. It will make forex reserves more diversified. Not to forget the reduced dependence on fundamentally weak currencies like the US dollar and Euro. Lastly, any flight to safety movement will not have as adverse an impact on currencies of BRICS as it does now.
Well, the idea is indeed a sound one. But how about going one step further and having a common currency? If problems in the Euro zone are any indication, a unified currency concept should not be touched even with a six-foot pole. A unified monetary policy is impossible with member nations having diverse political as well as fiscal policies. However, moving away from the dollar and Euro and trading in each other's currencies does indeed look like an option worth exploring we believe