The $ In The Face Of The Rise Of BRICS Currencies
BRICS is an acronym for Brazil, Russia, India, China and South Africa and they are planning to overthrow the dollar as the global currency.
How will they achieve that is not clear because it calls for the replacement of the mighty dollar with a multitude of currencies that include Russia’s ruble.
This means they want to replace the U.S. currency as a cross-border payment, at least among them five member states of the BRICS.
This is a measure with a tall order as it is not easy to challenge, let alone, think of replacing the dollar. However, the members of this little known organisation believe they can do it.
The call was made by Chinese leader Xi Jinping at a BRICS meeting last month, saying, “We should also expand BRICS cooperation on cross-border payment and credit rating to facilitate trade, investment, and financing among our countries.”
He went on to reaffirm the Chinese Communist Party’s commitment to working together with the BRICS nations, not only on this particular agenda, but also to achieve the CCP dream of the Global Development Initiative (GDI).
BRICS V/S SWIFT
The GDI would facilitate the use of a China-led, non-dollar payment system. The recently concluded BRICS summit in June also establishes the goals for the coming year.
Among them are the need to collaborate on a “the BRICS Payments Task Force (BPTF) as a platform for exchanging experience and knowledge, and welcomes the central banks’ further cooperation on the payments track.”
Vladimir Putin of Russia and Xi Jinping both urged for other forms of payment to lessen the dominance of the US currency in world trade and US control over the SWIFT system.
In the last century, the United States with the backing of the Western world and that of the ‘free nations’ started its domination of the SWIFT world.
With the war in Ukraine, and filled with desperation to teach Russia and its president Putin a lesson, the Americans abused their authority in the SWIFT world. They initiated a ban of Russia from the SWIFT system, not thinking of the possible consequences.
But since the last fifty years, augmented by the fall of the wall of Berlin and the collapse of communism in Russia, things have changed in the world.
China, Russia and India has risen as major trading partners with a large number of countries across the globe.
Note that Brazil and South Africa, the other two members of the BRICS are also largely populated nations. They are also strategically located in South America and South Africa.
BRICS is essentially an alliance that encompasses trade, technological development, investment and global commerce. As we can seem it engulf the Asian, American and African continent.
The BRICS have a combined area of 39,746,220 km2 (15,346,101.0 sq mi) and an estimated total population of about 3.21 billion, or about 26.7% of the world land surface and 41.5% of the world population. You can hate Wikipedia, but that is what it says.
Weaponising currencies
No one told us, during our school days, that countries could weaponise currencies – certainly not the way the Americans and the westerners do it.
With the Ukraine war and the fetish attitude of the West towards that country, they showed to the world that they can use SWIFT, the Dollar and the banking system as political means or weapons to combat their ‘enemies’.
Russia is a direct victim of the abuse of the so-called international system that eases remittance and it is also a victim of the abuse of the trust between nations (with regards to the USA and Europe that is) that your assets will be protected even safeguarded no matter what is the circumstances.
But since the West took the side of one country in a war that will last longer than they expect because Russia will never let go of Eastern Ukraine now that it has a strong foothold there, they thought abusing the system they established (SWIFT, International banking standards, protection of property and investment) will ease their burden.
But it is all about the burden of truth. The war opened a can of worms and the West is about to lose its stronghold on what governs international trade.
Bankers and economists in BRICS nations have suggested that the group “increase national currency settlements and lending to offset the US’ weaponization of the dollar.”
Putin’s address at the BRICS forum called for developing an international reserve currency based on a basket of currencies.
De-linking with SWIFT
Sergey Storchak, chief banker of Russian bank VEB.RF, told Global Times on June 21, “The BRICS and other interested nations need to talk about setting up their own independent global financial system.
“Whether it would be based on the Chinese currency or they will agree on something different, is not decided.
VERB.RF is one of the sanctioned entities that has been excluded from the U.S. SWIFT international payment system. It is surviving.
VEB.RF, or VEB, is a Russian state development corporation. It was founded in 2007 as a development institute.
Today VEB.RF is one of the largest investment companies and main development institute in Russia. It has financed more than 300 projects.
As part of measures to support exports, VEB is using the financial messaging system of the Bank of Russia and other alternative systems with correspondent banks in the event of disconnection from SWIFT.
SWIFT (Society for Worldwide Interbank Financial Telecommunications) serves as an intermediary and executor of financial transactions between banks around the world. The banking messaging service links around 11,000 financial institutions in more than 200 countries.