(Bloomberg) -- The BRICS group of nations will discuss the feasibility of introducing a common currency, according to the foreign minister of South Africa, which is preparing to host a summit of the bloc’s leaders.

US interest-rate hikes and geopolitical conflicts have pushed up the value of the American currency and all the commodities priced in it, to the detriment of most emerging markets. That’s spurred calls for alternatives to using the greenback as the global trading currency. 

One option is for the BRICS bloc — which comprises Brazil, Russia, India, China and South Africa — to adopt their own unit. The issue is likely be on the agenda of a meeting of the nations’ heads of state in Johannesburg on Aug. 22.

“It’s a matter we must discuss and discuss properly,” South African Minister of International Relations and Cooperation Naledi Pandor said in an interview in Cape Town on Tuesday. She said that without seeking to preempt the discussions, “I don’t think we should always assume the idea will work, because economics is very difficult and you have to have regard to all countries, especially in a situation of low growth when you are emerging from crises.”

BRICS represents more than 40% of the world’s population and almost a third of global economic output, making it one of the world’s most important economic blocs. Several other nations, including Saudi Arabia and Iran, have expressed an interest in joining its ranks.

The discussion about a common currency for the bloc has been generated by BRICS and other nations questioning why they can’t use their own currencies, instead of the US dollar, to trade, Pandor said. 

Any move toward the creation of a single form of legal tender would spur other debates about the creation of a single central bank and where it would be situated, said South African Reserve Bank Governor Lesetja Kganyago.

“I don’t know how we would talk of a currency issued by a bloc of countries that are in different geographical locations because currencies are national in nature,” he said in Johannesburg on Wednesday. “For the euro area to arrive at that, they had to establish a treaty where the other countries had to all surrender their currencies.”

BRICS nations passed the Group of Seven economies in 2020 by the purchasing power parity measure and last year were 4% larger. The IMF expects that gap to widen further this decade, even as the G-7 keeps its advantage when measured using market exchange rates.

Growth in developing economies means a “slow-moving” decline in the dominance of the dollar, according to Ziad Daoud, chief emerging markets economist at Bloomberg Economics. 

Still, the dollar is likely to remain the dominant currency for “a long time,” according to Johannesburg-based money managers Vestact Ltd.

“No other currency has the recognizability, stability and economic might behind it,” it said in a note to clients. “The only currency that is vaguely close to being able to replace the dollar is the euro.”

--With assistance from Monique Vanek.

(Updates with comment by South African central bank governor from seventh paragraph)

©2023 Bloomberg L.P.