A new “gold standard” currency system is being proposed by Africa’s development bank, and it will be supported by vital minerals like cobalt, copper, lithium, manganese, and some of the “rare earths” that are essential to the global energy shift and electric cars.
Only 3% of global energy investments and 2%, or $40 billion, of global green investments are made in the 54-nation region, which contains roughly 30% of the world’s important mineral deposits, according to the African Development Bank.
According to the AfDB, which is putting up a new “non-circulating” currency dubbed African Units of Account (AUA) that would be supported by vital mineral reserves, this is partially due to the continent’s unstable currency markets.
Laptops 1000To reduce carbon emissions and increase the supply of essential electricity, Africa must double its investments in clean energy to an average of $200 billion annually.
Countries would pool a predetermined amount of their proven essential mineral deposits under the AfDB concept, and local currencies could then be exchanged at a predetermined rate.
In a recent report, the AfDB stated, “The idea borrows from the Gold Standard that anchored global currency stability,” although it did not specify when the currency would be introduced.
The development bank based in Abidjan made the proposal last year, but this is the first time it has provided specifics.
The AfDB stated that a basket of essential commodities will retain its value “better than any African currency” and that it “further builds on the CFA-Euro peg in Francophone countries, which is backed by a pledge of external reserves.”
Emerging market nations have taken steps to mitigate the dangers associated with their reliance on the dollar for trade and other transactions.
On Thursday, U.S. President Donald Trump threatened to levy 100% tariffs on BRICS countries if they were to switch from using the dollar as their reserve currency.
According to the AfDB, the proposed new currency would “mitigate the currency and convertibility risks” and so assist African governments in luring foreign investment into green energy projects.
