The World Economy on the Threshold of Change: Digital Currency, Gold, and Ukraine’s Place in the New Reality
The world financial system is on the threshold of large-scale changes, where geopolitical influence on the economy begins to play a key role. At a time when BRICS is announcing the creation of alternative payment systems, China is actively restructuring the gold market, and central bank digital currencies are becoming the new reality, the old economic model is bursting at the seams. The dollar, which for a long time remained a symbol of financial dominance, was in danger of losing its central status.
Now, new rules of the game are being actively created by the giants of world politics, and their decisions are already determining the future of the markets. For Ukraine, this turning point can become both a starting point for strengthening the national economy and a risk factor for remaining on the periphery of global processes. The world is moving forward, and countries that delay adapting to the new reality risk losing strategic positions. That is why Ukraine needs not just to observe changes and ask questions about survival, but to find its way in this financial geopolitics in order to avoid dependence on big players and use opportunities for its own strengthening.
BRICS Bridge: an alternative payment system and its significance for Ukraine
Since the beginning of 2024, the BRICS group has expanded its borders to include Saudi Arabia, Iran, the UAE, Ethiopia and Egypt, doubling its membership. Together, these countries cover almost 30% of the world’s land area and 45% of the population, creating a powerful bloc with economic and political influence. At the same time, more than 40 states have expressed interest in joining, and 15, including Kazakhstan, Belarus, Cuba and Palestine, have submitted official applications. It is worth noting that initially BRICS was declaratively created to expand investment opportunities, but over time this organization has turned into a geopolitical block within which, since 2009, the governments of the participating countries hold annual summits and coordinate multilateral policies.
The five founding countries of BRICS, which are also part of the G20, have enormous economic potential. Their combined nominal GDP is $28 trillion, equal to about 27% of global gross product. At the same time, their combined GDP at purchasing power parity (PPP) reaches $57 trillion, which is about a third of world GDP. In addition, the BRICS countries have significant foreign exchange reserves, which amount to more than 5 trillion US dollars.
BRICS is positioned as the main geopolitical rival of the G7 — an alliance of the world’s most developed economies. This block is developing alternative initiatives, including the BRICS Development Bank, a standby agreement in case of financial crises, the BRICS PAY payment system (an analogue of SWIFT), a joint statistical platform, its own reserve currency, as well as educational cooperation through the BRICS University League and infrastructure projects such as BRICS submarine cable to ensure secure communication.
A key tool in realizing the ambitions of the extended BRICS alliance is the BRICS Bridge payment system, which offers settlements based on national currencies – digital yuan, rupee or ruble, and uses blockchain technology to ensure security and maintain trade relations without the risk of blocking transactions due to US or EU sanctions. Its main goal is to strengthen the economic independence of the BRICS countries, allowing them to conduct trade without the use of the dollar and traditional platforms controlled by the West. This system offers a new clearing model that allows participating countries to exchange resources — from oil to high-tech equipment — without using dollars or euros. However, it is clear that China is the main beneficiary, using the platform as a tool to strengthen its financial system and promote the yuan as a regional reserve currency. Its banking system gets direct access to international settlements, avoiding the risks of blocking accounts in dollars or euros. India, in turn, is looking for benefits in access to cheaper energy resources. For Russia, this system is almost the only way to support international trade in conditions of sanctions isolation.
Consequently, the BRICS Bridge can become a new standard in international settlements, offering an alternative to the hegemony of the dollar. At the same time, it signals the growing influence of BRICS in the global financial system, offering a tool that can challenge the traditional architecture of international settlements. The expansion of BRICS and the development of the BRICS Bridge present the world with a new financial reality.
The emergence of alternative systems such as the BRICS Bridge begs the question: Are fiat currencies really losing ground? Despite claims of the “beginning of the end” of the dollar era, the BRICS Bridge currently does not have enough influence to fundamentally change the balance. The dollar still accounts for more than 58% of global reserves, and even the BRICS countries use it as their primary investment vehicle. However, the de-dollarization trend is visible, with central banks increasingly favoring gold over US Treasuries. The digital currencies used in this system allow bypassing traditional financial routes such as SWIFT (International Interbank System for Transferring Information and Making Payments – ed.) and ensuring transparency of transactions through the blockchain. At the same time, the real benefit from such a model will undoubtedly go to China, because the majority of the trade balance is still directed to its economy.
As we can see, the BRICS Bridge works only within a narrow circle of participating countries and is not able to replace the global financial infrastructure. Fiat currencies continue to be the basis of the world economy, although their role is gradually adapting to new conditions. In addition, BRICS, despite its economic weight and global ambitions, remains a heterogeneous bloc with internal contradictions. So, next to the economic giant China, which dominates the alliance, is Ethiopia, a country where out of 126 million people, about 30 million live below the extreme poverty line. Such a disparity exacerbates the structural problems of the bloc, which is grappling with internal tensions arising from different approaches to relations with the US and ambiguous positions on Russia’s war against Ukraine. Regional conflicts also bring additional instability. For example, the dispute between Egypt and Ethiopia over the Great Nile Dam has the potential to escalate into a military confrontation. Tension also exists between Algeria and the accession candidate, Morocco. On the one hand, the increase in the number of African members of the bloc can strengthen the influence of BRICS in the international arena. On the other hand, it creates additional challenges that can inhibit collective initiatives.
In the context of the development of such projects as the BRICS Bridge or the joint payment system, internal disagreements can become a serious obstacle to the effective implementation of ambitious plans. For the bloc countries, it is important not only to fight for the growth of influence, but also to find compromises that will avoid the escalation of conflicts. In this context, Ukraine should take into account both the strength and weakness of BRICS in forming its own strategy for integration into the new global financial order. Our country needs not only to talk about survival and monitor global changes, but also to determine its place in the new order in order to use these processes to strengthen its own economic position.
BRICS Bridge shows how financial systems become instruments of political influence. For Ukraine, this brings both challenges and opportunities. On the one hand, the growing popularity of alternative systems forces us to rethink foreign trade strategies. For example, trade with the BRICS countries, moving to settlements in yuan or rupees, will require adaptation of the financial infrastructure. On the other hand, Ukraine has a chance to develop its own financial technologies. The introduction of the digital hryvnia can be a key step in creating a modern payment ecosystem that will allow integration into global innovation processes. But this requires significant investment and political will.
The role of China in the global gold market: what it means for Ukraine
As already mentioned, the global financial system is undergoing rapid changes. A key factor in these transformations is China’s resurgence in the precious metals market. Last year, he played a key role in pushing gold prices to all-time highs, signaling his growing influence. Thus, according to the World Gold Council (WGC), in 2024, after three years of stability, gold prices exceeded the mark of $2,075 per ounce in March, setting a new record of $2,214 per ounce. In April 2024, the price of gold again reached a record high, reaching $2,400.67 per ounce. Analysts of the Swiss bank UBS predict that in 2025 the price of gold may rise to $2,900–3,000 per ounce (121,068–125,243 UAH). At the same time, some experts believe that in the event of increased economic instability, the price may reach $3,500 (146,117 UAH).
Unlike other assets, gold has always performed a dual function – it was an investment tool and a store of value during crises. China, realizing its importance, not only builds up its own reserves, but also actively changes the rules of the game on the world market. For him, gold is not just a commodity, but a strategic tool for strengthening positions on the global stage. This trend already has its consequences for the world economy, now gold is increasingly used as a means of economic influence.
The growing demand for gold in China leads to a reduction in its availability to other countries, which can create a shortage of this asset at the global level. In addition, the value of gold is increasing against the background of the development of central bank digital currencies (CBDC). China is actively promoting the digital yuan, using it as an alternative to the dollar in international payments. This tool allows China to bypass traditional US-controlled payment systems and creates a new mechanism for global financial influence.
The development of China as a major player in the gold market and its introduction of new financial models is a signal for Ukraine about the need to adapt to new realities. It should strengthen its gold and foreign exchange reserves, develop the domestic market of precious metals, focusing on long-term trends. Gold should become not only a reserve asset, but also part of a long-term financial strategy. Strengthening Ukraine’s position in the market of precious metals will reduce dependence on external sources of financing and create a more sustainable economy.
Digital currencies of central banks: impact on Ukraine
One of the key trends in the modern financial system, which is fundamentally changing approaches to money circulation, monetary policy and global economic interaction, is the development of central bank digital currencies (CBDC). This phenomenon goes beyond theoretical concepts, transforming into a practical tool that affects the dynamics of international financial markets and becomes an integral part of the strategic planning of many countries.
Since China began large-scale testing of the digital yuan, the debate on the need for CBDC implementation in various countries has become even more intense. The European Central Bank, the US Federal Reserve System and other players are actively exploring the potential of these tools, in particular to increase the transparency of financial transactions, reduce cash handling costs and combat illegal transactions. For Ukraine, the issue of CBDC implementation takes on additional importance in the context of integration into the European economic community, digitalization of the economy, and the fight against the shadow sector.
Issuing a digital hryvnia can be a logical continuation of the policy of digital transformation, which is actively implemented by the government. At the same time, such a step carries a number of risks that require careful analysis. First, it is a matter of cyber security. In a world where cyber threats are becoming more and more complex, ensuring the security of the national currency is a priority. Secondly, the implementation of CBDC requires modernization of the financial infrastructure, which requires significant investment and technical training. Thirdly, it is necessary to clearly define how the digital hryvnia will affect the interaction between state and private financial institutions, in particular in the aspect of lending.
The international context is also an important factor. The implementation of the CBDC could change the structure of the global monetary system, in particular the role of the dollar as a reserve currency. This can be both an advantage for Ukraine, allowing it to reduce dependence on the dollar in payments, and a challenge if the dominance of large economies through their digital currencies leads to new forms of financial dependence. In this context, it is important for Ukraine to build a strategic partnership with countries that are already testing CBDC and take into account their experience.
In addition, digital currency can become a tool for strengthening citizens’ trust in the banking system. In a country where trust in financial institutions has historically remained low, the introduction of a transparent and efficient digital currency system can be a stabilizing factor. However, this is possible only under the condition of ensuring clear regulation, effective communication with citizens and integration of the private sector in the process of developing and implementing new solutions.
For Ukraine, the development of the CBDC is an important technological innovation, as well as part of the global geo-economic game, where the speed and quality of the decisions made can determine the country’s competitiveness in the future. Therefore, the preparation for the launch of the digital hryvnia should be accompanied by both technical solutions and a broad discussion among experts, financial institutions and civil society. Only then will this instrument be able to become a lever of economic growth, and not another source of risks.
Consequently, global financial systems are entering a phase of profound transformation. BRICS initiatives to create alternative payment systems, China’s active expansion in the gold market, and the development of central bank digital currencies (CBDCs) clearly demonstrate that the world order is gradually changing. For Ukraine, this is a time of difficult decisions, where each step can either strengthen its economic position or deepen its dependence on new geopolitical players. It is important for our country to maintain a balance between integration into new financial systems and protection of national interests. Geopolitics and finance have become inextricably linked, and this reality requires a clear strategy and quick actions from Ukraine. At the same time, it is important not just to adapt, but to use these processes for your own strengthening. A clear policy in the field of digital currencies, integration into new payment systems without loss of sovereignty, development of one’s own financial infrastructure – these are the keys to success in the new architecture of the world economy. The world is changing, and those who are not ready for these changes risk being left on the sidelines.
Oksana Ishchenko
