Azernews.Az

Qabil Ashirov

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The global financial media is buzzing with speculation. In recent months, some analysts, particularly in media outlets of Global South countries, have highlighted rising gold prices and reported that several central banks, including India’s, are exploring the creation of gold-backed digital currencies. These narratives often suggest that BRICS+ countries might one day introduce a currency capable of dethroning the US dollar.

The reality, however, is far more complex. While gold-backed digital tokens exist in the private sector, for example, Pax Gold and Tether Gold, these are niche financial instruments, not national currencies. No BRICS+ country has issued, or is close to issuing, a state-backed digital currency tied to gold or any other element that could compete with the dollar at the global level.

The allure of a gold-backed digital currency created by BRICS is understandable: gold is historically perceived as a safe-haven asset, and the idea of tying a new currency to a tangible commodity appeals to investors wary of fiat money. However, creating a new currency that rivals the dollar is not a matter of physics or metallurgy, it is a matter of trust. The dollar’s dominance is not based on gold or any intrinsic value; it rests entirely on the collective confidence of governments, banks, and markets worldwide. Even countries historically hostile to the United States have consistently held dollars in their reserves. Saddam Hussein, Muammar Gaddafi, and the Assad family all stored significant amounts of US dollars in their accounts, vaults, and safes; a testimony to the enduring trust in the dollar.

The BRICS+ bloc, including Russia, China, India, Brazil, South Africa, and potential affiliates, has certainly grown economically and industrially. Yet, economic might alone cannot replace the dollar. For instance, China is the world’s second-largest economy, and the European Union ranks third, but how many countries actually hold the yuan as a reserve currency compared to the euro? The answer: very few. Even among nations seeking to challenge the “Global North,” the yuan has yet to surpass the euro in reserve currency status.

Furthermore, the notion that a currency’s value depends on the commodity backing it, whether gold, uranium, or any other resource, is a misunderstanding of modern monetary systems. Money functions because people collectively believe in its value. A new BRICS+ currency, even if backed by gold or another element, would fail without widespread trust. In other words, you can back it with the most precious metals on Earth, but if the global market does not recognize it as reliable, it will remain ineffective.

This perspective is reinforced when considering cultural and historical patterns. Economies and societies evolve through what social scientists call “cultural evolution,” the gradual accumulation of shared knowledge, institutions, and behaviors. Fiat currency, despite its flaws, represents one of humanity’s most successful innovations in economic evolution. Attempting to revert to a gold-based system is analogous to abandoning tractors for hand plows: it is not just impractical, it is regressive. History offers no examples of societies improving by discarding modern innovations in favor of older methods.

Overall, while speculation about BRICS+ creating a dollar-challenging currency may dominate headlines, it remains just that—speculation. The structural, psychological, and historical foundations that sustain the dollar cannot be easily replicated or replaced. Gold-backed digital tokens may grow in niche markets, but the idea that they, or any BRICS+ initiative, could dethrone the dollar is, at present, unrealistic.

It doesn’t mean that the dollar is permanently unassailable, and it cannot be dethroned by a challenger that fails to replicate the foundational elements of its trust. The current model pursued by some BRICS+ nations, achieving economic might without concomitant advances in political transparency, institutional stability, and the guaranteed rule of law, is insufficient. A currency's global status is a reflection of the system it represents. Therefore, a future challenger will not succeed by simply offering a gold-backed alternative or by rallying geopolitical dissent. It will only emerge from a system that is perceived as more democratic, more stable, and more reliably governed than the current order. The dollar's true successor, should it ever appear, will be built on a superior form of institutional trust, not merely on industrial capacity or a shared desire to break from the West.