I'd echo this and add that I can't really see a BRICS "gold-backed" currency being trusted. Let's say that they launch this currency and 1 BRICSY == 1 centigram of gold (approximately $0.63). Therefore, if I have 100 BRICSY in my pocket, I can show up at the central bank of Russia or Brazil and trade it for 1 gram of gold.
Except that there would be huge incentive for any country to cheat. If I'm Russia, why not print 2x more BRICSY notes than I have gold for? Why not print 10x more. What are the odds that everyone wants to exchange their BRICSY notes for gold all at once? Not only that, if the notes are identical from country to country (like the Euro), if I run out of gold, I could simply say that you need to visit a different central bank to claim the gold. I could claim it is still backed by gold, but that the gold is in a different central bank.
In fact, this could be a brilliant plan for one of the central banks to essentially rob the others. Let's say each country starts with the same amount of gold reserves and each country prints the exact same number of BRICSY notes. Let's say I'm Russia and over the next few years I start trading my BRICSY notes for gold from the other 4 countries. I do it slowly and I launder the activity so that it seems like normal activity. Now I've taken 25% of the gold reserves of China, India, South Africa, and Brazil. A year later, China says "we'd like to exchange a bunch of BRICSY notes for some gold Russia." I say, "sorry, we've decided to discontinue the BRICSY currency."
Maybe each BRICSY will be printed with the country of origin and only convertible to gold at that country of origin. That would prevent the former from happening, but it would also mean each BRICSY would have a different value. I'd value a Chinese BRICSY higher than a Russian BRICSY. Even if you trust both countries equally, the odds I (as an American) can convert a BRICSY to gold from Russia is way lower. A BRICSY from Brazil seems safer than from China in some ways given that US-Chinese relations are a bit rocky on the economic side of things and Brazil-US relations just don't have the same geopolitical turmoil.
Over the past year, we've seen huge cryptocurrency crises with stable coins and whether they were actually backed 1:1 with USD. Given some of the countries on the BRICS list, I don't see how people would be inclined to trust their system. Even if one thinks the gold standard is good (it isn't), it still requires you to trust that the country isn't lying about its gold reserves. I don't think the gold standard is a good system, but it feels like gold-standard stans need a phrase akin to "Not your keys, not your coins" - maybe "not your metal, not your gold." People complain that a country could do something bad with fiat currency (which they can). There's nothing stopping a country from printing too much fiat currency. However, there's nothing stopping a country from printing too much gold-standard money either.
Again, we've seen this with stable coins. They can mint way more stable coins than the USD they hold in reserve because most people won't be converting them into USD. Converting cash into metal is an even more arduous process and carries substantial risk (like the metal being stolen or lost). A government could probably keep less than 10% gold reserves and no one would be the wiser.
The US government is far from perfect and the dollar isn't perfect. At the same time, I have less confidence in BRICS. Brazil had major currency problems in the past. Their conversion to the Real is an amazing economics case study to break hyperinflation, but I wouldn't be sold on trusting them to the extent that I trust the US government and the dollar. Russia is...I don't even know what to say there, but their involvement in a project would make me insanely skeptical. India wiped out 86% of its cash in 2016 (https://www.bbc.com/news/world-asia-india-37974423). What happens if they say, "people aren't paying taxes again and 90% of Indian BRICSY notes are no longer valid."
Maybe this is just a currency for trade between nations and not for individuals to hold. That still requires a lot of trust between countries that have a lot of incentive to deceive each other on this front. If I'm India, deceiving China and giving them worthless paper could let me bootstrap a manufacturing industry to rival China. Chinese companies will take payment in BRICSYs for things sold internationally. I give my Indian companies BRICSYs that are "backed by gold (but secretly not)" and have them start buying heavy manufacturing equipment. China has shown that it'll export more than it imports for a good while. If/when China comes to collect their gold, I just say that the convertibility to gold has ended. At this point, I've used monopoly money to bootstrap the industries that have made China such a globally important country - plus, in 2035 or 2050, India will have way more people than China. I've successfully tipped the balance of power in Asia from China to India because China trusted that the BRICSY would actually be convertible to gold.
Yes, with fiat currency, countries (and individuals) are trusting that things will be convertible to a certain value in the future. However, that's one of the reasons for the dollar dominance. People (and countries) trust the dollar. Yes, inflation happens and the dollar isn't perfect, but the dollar has a better track record than basically any real alternative. The Euro is getting a good reputation. Sterling isn't bad. But why am I going to trust BRICS countries that something is actually convertible to gold. Even the US ended its gold standard because it wasn't really a tenable idea. I don't want to sound too down on the BRICS countries, but they often have a much shorter track record of good, stable economic governance.
If you're trusting that someone else will convert paper into gold, it feels like you end up with the same trust that you need with a fiat currency. I don't trust stable coins to be backed 1:1 with USD - there are too many sketchy actors in the space and even a reputable company is less trustworthy than the US government in this regard. Why would I trust the BRICS countries to maintain 1:1 gold convertibility? Even the US government ended its gold standard basically without notice. If you don't hold the metal yourself, is a gold standard really that different from fiat currency? Maybe it is - at least temporarily. The US peg lasted around 30 years. Would a BRICS peg last longer?
Plus, there's all the reasons why the gold standard isn't even a good plan in the first place - even if you could trust it.
Except that there would be huge incentive for any country to cheat. If I'm Russia, why not print 2x more BRICSY notes than I have gold for? Why not print 10x more. What are the odds that everyone wants to exchange their BRICSY notes for gold all at once? Not only that, if the notes are identical from country to country (like the Euro), if I run out of gold, I could simply say that you need to visit a different central bank to claim the gold. I could claim it is still backed by gold, but that the gold is in a different central bank.
In fact, this could be a brilliant plan for one of the central banks to essentially rob the others. Let's say each country starts with the same amount of gold reserves and each country prints the exact same number of BRICSY notes. Let's say I'm Russia and over the next few years I start trading my BRICSY notes for gold from the other 4 countries. I do it slowly and I launder the activity so that it seems like normal activity. Now I've taken 25% of the gold reserves of China, India, South Africa, and Brazil. A year later, China says "we'd like to exchange a bunch of BRICSY notes for some gold Russia." I say, "sorry, we've decided to discontinue the BRICSY currency."
Maybe each BRICSY will be printed with the country of origin and only convertible to gold at that country of origin. That would prevent the former from happening, but it would also mean each BRICSY would have a different value. I'd value a Chinese BRICSY higher than a Russian BRICSY. Even if you trust both countries equally, the odds I (as an American) can convert a BRICSY to gold from Russia is way lower. A BRICSY from Brazil seems safer than from China in some ways given that US-Chinese relations are a bit rocky on the economic side of things and Brazil-US relations just don't have the same geopolitical turmoil.
Over the past year, we've seen huge cryptocurrency crises with stable coins and whether they were actually backed 1:1 with USD. Given some of the countries on the BRICS list, I don't see how people would be inclined to trust their system. Even if one thinks the gold standard is good (it isn't), it still requires you to trust that the country isn't lying about its gold reserves. I don't think the gold standard is a good system, but it feels like gold-standard stans need a phrase akin to "Not your keys, not your coins" - maybe "not your metal, not your gold." People complain that a country could do something bad with fiat currency (which they can). There's nothing stopping a country from printing too much fiat currency. However, there's nothing stopping a country from printing too much gold-standard money either.
Again, we've seen this with stable coins. They can mint way more stable coins than the USD they hold in reserve because most people won't be converting them into USD. Converting cash into metal is an even more arduous process and carries substantial risk (like the metal being stolen or lost). A government could probably keep less than 10% gold reserves and no one would be the wiser.
The US government is far from perfect and the dollar isn't perfect. At the same time, I have less confidence in BRICS. Brazil had major currency problems in the past. Their conversion to the Real is an amazing economics case study to break hyperinflation, but I wouldn't be sold on trusting them to the extent that I trust the US government and the dollar. Russia is...I don't even know what to say there, but their involvement in a project would make me insanely skeptical. India wiped out 86% of its cash in 2016 (https://www.bbc.com/news/world-asia-india-37974423). What happens if they say, "people aren't paying taxes again and 90% of Indian BRICSY notes are no longer valid."
Maybe this is just a currency for trade between nations and not for individuals to hold. That still requires a lot of trust between countries that have a lot of incentive to deceive each other on this front. If I'm India, deceiving China and giving them worthless paper could let me bootstrap a manufacturing industry to rival China. Chinese companies will take payment in BRICSYs for things sold internationally. I give my Indian companies BRICSYs that are "backed by gold (but secretly not)" and have them start buying heavy manufacturing equipment. China has shown that it'll export more than it imports for a good while. If/when China comes to collect their gold, I just say that the convertibility to gold has ended. At this point, I've used monopoly money to bootstrap the industries that have made China such a globally important country - plus, in 2035 or 2050, India will have way more people than China. I've successfully tipped the balance of power in Asia from China to India because China trusted that the BRICSY would actually be convertible to gold.
Yes, with fiat currency, countries (and individuals) are trusting that things will be convertible to a certain value in the future. However, that's one of the reasons for the dollar dominance. People (and countries) trust the dollar. Yes, inflation happens and the dollar isn't perfect, but the dollar has a better track record than basically any real alternative. The Euro is getting a good reputation. Sterling isn't bad. But why am I going to trust BRICS countries that something is actually convertible to gold. Even the US ended its gold standard because it wasn't really a tenable idea. I don't want to sound too down on the BRICS countries, but they often have a much shorter track record of good, stable economic governance.
If you're trusting that someone else will convert paper into gold, it feels like you end up with the same trust that you need with a fiat currency. I don't trust stable coins to be backed 1:1 with USD - there are too many sketchy actors in the space and even a reputable company is less trustworthy than the US government in this regard. Why would I trust the BRICS countries to maintain 1:1 gold convertibility? Even the US government ended its gold standard basically without notice. If you don't hold the metal yourself, is a gold standard really that different from fiat currency? Maybe it is - at least temporarily. The US peg lasted around 30 years. Would a BRICS peg last longer?
Plus, there's all the reasons why the gold standard isn't even a good plan in the first place - even if you could trust it.