Dean, faculty of accounting and finance at the University for Professional Studies, Accra (UPSA), Prof Isaac Boadi, has revealed that BRICS currency will affect the international capital flow.
According to him, the impact of BRICS currency if it succeeds is quite enormous for the African continent particularly. He indicated that the financial scene on the African continent will equally be redefined.
“We are likely to have modifications when it comes to international capital flow, it will be affected and there will also be a shift in terms of the trading patterns. Then we are also looking at variations when it comes to exchange rate, it will also be impacted. Then, we will also have issues when it comes to preferences for different reserves. These are some of the things we think that when they are able to come together, we are going to have these challenges.”
Prof Isaac Boadi
Commenting on what Africa can learn from BRICS nation with respect to their currency, Prof Boadi stated that Africans learn from the best practices. As such, he stated that the BRICS currency is a rare case in academia that policy makers need to also get themselves involved in.
“Because lessons out of this, experiences, and challenges, proffer some ideas and suggestions for our own currency that we want to propagate. So, lesson out of the BRICS – it’s a good model that we want to learn lessons out of.”
Prof Isaac Boadi
Furthermore, Prof Boadi highlighted that Africa has taken a long time in developing the ECO – a common currency intended for use by African countries in West Africa. He however explained that there has been a delay in its usage because “we don’t have lessons and this is a test case”.
“… That’s what we believe in academia, that let’s have a case study and see how we will be able to navigate the experience and challenges the other model want to use and we learn out of that.”
Prof Isaac Boadi
BRICS likely to ease pressure on dollar
On his part, a senior lecturer at the University for Professional Studies, Accra (UPSA), Dr Eric Boakye Yiadom, noted that in the short term, BRICS currency is going to ease pressure and the demand for the dollar. However, he stated that in the long term, the “status quo will come back if we so much depend on the BRIC currency if it is developed”.
“So, what is happening is that it will also inform the conversation in Africa, that our common currency that we’ve been trying to do over the years, it is appropriate that we bring a currency that will facilitate trade. As far as we continue to depend on somebody’s currency, you can easily be influenced. So, bringing the common African currency development into perspective will help, especially at this time. Other than that, in the long term, it is just trading the dollar risk for the BRICS currency risk, and the status quo will come back.”
Dr Eric Boakye Yiadom
Commenting on whether dominant currencies will give way to other currencies, especially in the case of Euro and Chinese yuan replacing the dollar, Dr Yiadom reckoned that the situation won’t be a new phenomenon. With this, he explained that history from the past 500 years suggest so and that for every hundred years, new currencies emerge.
Dr Yiadom emphasized that the US dollar became dominant from the first World War because US became an economic powerhouse. Owing to this, he revealed that the economic control of a currency determines how it leads the global discussion.
“I should say that between the Euro and the Chinese yuan, currently, the Euro controls about 16.5% trillion in terms of the economy and China is controlling about 26 trillion. What it means is that, in as much as the Euro seems stronger, the Chinese yuan is more possible because of its dominance. It has a global share and China is leading the economies in terms of GDP. So, if you’re talking about economic strength and the trend for the past 500 years, it is more possible for the Chinese yuan to control the world rather than the Euro.”
Dr Eric Boakye Yiadom
