Explainer: Why BRICS nations want to create a new currency for trade payments?

Since the Ukraine-Russia war began more than a year ago, it seems as though Russia is working on taking its relationship with some allies to the next level.

The ties between the BRICS nations, which include Russia, China, India, Brazil, and South Africa, seem to get stronger as they approach the formation of a new currency, reports Times of India. 

The BRICS nations are in the process of creating a new medium for payments, according to Russian lawmaker Alexander Babakov. In a statement revealed by Babakv, the new medium for payments "does not defend the dollar or euro". 

Babakov, who is the deputy Chairman of Russia's State Duma, stated that the new currency would be secured by gold and other commodities such as rare-earth elements.

The BRICS nations are planning to reveal the developments of the currency at the BRICS leaders' summit this year, he said during the India-Russia Business Forum in New Delhi last week.

The comments were made a few days before South Africa sent senior officials to Russia to discuss the "recalibration of the global order" with President Vladimir Putin's party. However, it is important to note that these claims have not been verified by the BRICS nations. 

South Africa is slated to host a BRICS summit in August this year.

The new currency could reduce the world's dependence on the US dollar and the Euro, according to reports from Sputnik. 

Days after Chinese Premier Xi Jinping visited Moscow to further cement the "no limits" partnership announced last year, Russian President Putin adopted a new foreign policy that put India and China at the forefront.

According to Bloomberg, China's yuan has replaced the US dollar as the most traded currency in Russia. For the first time, The yuan surpassed the dollar in monthly trading volume in February. 

Before the invasion, the yuan's trading volume on the Russian market was negligible, adds Times of India. 

"Russia to build up partnership with India"

"Russia will continue to build up a particularly privileged strategic partnership with the Republic of India with a view to enhance and expand cooperation in all areas on a mutually beneficial basis and place special emphasis on increasing the volume of bilateral trade, strengthening investment and technological ties, and ensuring their resistance to destructive actions of unfriendly states and their alliances," the statement said according to the reports. 

It was also announced that  'to help adapt the world order to the realities of a multipolar world', its intention will be to prioritise and enhance its capacity and international role in groupings such as BRICS.

The world continues to wait for the BRICS nations to verify this claim made by the Russian lawmaker, and whether they can bring more clarity regarding such currency being created.