by Philip Pilkington
Wednesday, 29
June 2022
Reaction
12:30

The new BRICS alliance is a mortal threat to the West

A new global reserve currency will undermine US dollar supremacy
by Philip Pilkington
The new squad. Credit: Getty

This week it was announced that Iran and Argentina had applied to join the BRICS.  The BRICS — which until recently has been made up of Brazil, Russia, India, China, and South Africa — is a forum that allows countries outside of Western developed economies to forge alliances on economic issues. As it gets larger, its influence and economic importance grows.

Last week at one of the BRICS forums President Putin announced that Russia, alongside China and other BRICS nations, was getting ready to launch a new global reserve currency made up of a basket of BRICS currencies. If successful, such a reserve currency would be a direct threat to the currently dominant US dollar.

It is difficult not to read the two stories as part of the same general arc. Iran and Argentina are jumping on the bandwagon because they sense an opportunity to build an alternative alliance to Western-led globalisation. Meanwhile, the other BRICS members are inviting them on board because they smell blood because they see large economic weaknesses being exposed by the quick collapse of the Western sanctions against Russia.

Could a new trade bloc with its own reserve currency be a threat to the West and to US dollar dominance? Almost certainly. In their current form the BRICS make up around 31.5% of world GDP when adjusted on a purchasing power parity basis. With Iran and Argentina added, this rises to 33% of world GDP. This is a huge potential trade bloc, and 33% of global GDP is certainly enough to justify a reserve currency.

But beyond this, the potential for synergies between the countries is enormous. Taken together, the expanded BRICS countries currently produce around 26% of global oil output and 50% of iron ore production used to make steel. They produce around 40% of global corn production and 46% of global wheat production. If these were all traded in the new reserve currency, it would instantly become a cornerstone of the world economy.

Meanwhile, the US dollar is already sagging. At the beginning of June, the IMF released a report showing that the US dollar today makes up 59% of global reserves — a far cry from the 70% it made up in 1999. The report noted that central bank reserve managers were actively shifting their portfolios away from dollars and into non-traditional currencies.

Now imagine what that would look that if the BRICS launched its reserve currency — let’s call it the ‘BRIC’. Assume that the BRIC was held as a reserve roughly in line with the bloc’s importance in terms of global GDP and that it took a bite out of all other reserve holdings equally. The impact would look something like the chart below. As we can see, even this simple exercise shows that the BRIC would easily hold its own against the US dollar.

The changes that are taking place in the global economy are certainly the biggest that have been seen since 1945. Yet there is very little discussion of it in the press or in political circles. Are Western leaders planning for this? Do they have a strategy for this brave new world? We should hope so, as these upheavals could drastically impact Western living standards and our place in the world.

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Jim R
Jim R
3 months ago

Cause and effect is always inverted in these discussions. The rise of the BRICS countries is not the cause of the decline of the West. The decline of the West is causing or at least creating the opportunity for the rise of the BRICS countries. As long as we externalize the threats and ignore how we have completely abandoned the formula of our own success, we have no hope of stabilizing or reversing these trends. What’s really changing now is the rest of the world no longer seeks to emulate the West – this is indeed the tipping point.

Last edited 3 months ago by Jim R
Mr Sketerzen Bhoto
Mr Sketerzen Bhoto
3 months ago
Reply to  Jim R

Correct.

Dan Abreu
Dan Abreu
3 months ago
Reply to  Jim R

Agreed. Not only the rest of the world is not interested in emulating the West. They got proof their USA reserves are not sanction resistant. The world is looking for alternatives to get off the world reserve that’s enslaving them with a monetary policy they don’t own nor control.
In the end, many new currencies, and baskets might be created.
This until people realize that the Brave New Coin does not require trust to an external nation or corruptible central bank. It will serve as the global reserve without counterparty risk. The world hasn’t realized Bitcoin will be it, we are too early.

Karen Weeden
Karen Weeden
3 months ago
Reply to  Dan Abreu

I cannot understand how the value of Bitcoin follows the Dow, surely it should be an inverse relationship.

Justin Clark
Justin Clark
3 months ago
Reply to  Dan Abreu

Trader University youtube channel (Matthew Kratter) covers this very well – recommended viewing.

Nilus Dionis
Nilus Dionis
2 months ago
Reply to  Dan Abreu

It is exactly because Bitcoin can’t be controlled in any way it will never become anything. It’s role as currency is non-existent. Read the article again, learn something. Governments want control over currencies especially governments like China, India and Russia etc. Don’t you get it? And they will institute policies that will ensure that control remains. China killed Bitcoin & others will do the same if it causes a threat. You just don’t get.

Karen Weeden
Karen Weeden
3 months ago
Reply to  Jim R

At last! The American concept of ‘dwmocracy’ is flawed, so many poor and downtrodden Americans who are not benefitted by capitalism. The sooner the IMF loses its power to destroy other countries the better!

Keith Mcmaugh
Keith Mcmaugh
2 months ago
Reply to  Karen Weeden

KW, yes, one just needs to see the results of many decades of Anglo American Dominance to determine the better countries to associate with.
An extremely exciting measure of American success, is its inequality gap—- fantastic if you’re in the top.
Western sanctions are much like antibiotics, ineffective after overuse.
It seems like the Global South is making realistic strides.

Fran Martinez
Fran Martinez
3 months ago
Reply to  Jim R

You are completely right! The West keeps showing that it should not be emulated, always giving more importance to face masks and pronouns than real issues that affect its citizens.

Andrew Fisher
Andrew Fisher
2 months ago
Reply to  Fran Martinez

Which would be a good enough point, except that the BRICS countries, or at least the RICS have even more government dictated policies imposed on the people whatever the evidence than do western ones! The collective is far more important to them than any notion of individual rights.. The rising powers are certainly not libertarian paradises; be careful what you wish for.

Keith Mcmaugh
Keith Mcmaugh
2 months ago
Reply to  Andrew Fisher

Recently, President Joe is using the a little bit of the same power as those dictated policies…. Baby formula under Defense Production Act, various schemes to control gasoline prices, and other measures will be made.
The Supreme Court and President Donald are not much different than those in African (apology to Africa).
The Rest of the world does not regard America as the best example for being a nation.

vladimir gorelov
vladimir gorelov
3 months ago
Reply to  Jim R

Very true

Michael B
Michael B
3 months ago
Reply to  Jim R

Absolutely correct. Because the west has been historically abusing the developing world with its economic & political capital in unjust & extractive treatment.The rest of the world is now realizing an alternative economic structure needs to be formulated to create in a fair & equitable manner.

Liam F
Liam F
2 months ago
Reply to  Michael B

you’re conflating two separate things: historic injustice and current situation. The rest of the world shows us few examples of a better model. Indeed the BRICS display far more kleptocracy towards their own that the west ever has.
The rest of the world has done a superb job at being just as bad as we ever were.

Andrew Fisher
Andrew Fisher
2 months ago
Reply to  Michael B

That is largely bunkum. Where would one start, but you could perhaps with the fact that China didn’t become richer by becoming more Communist!

Keith Mcmaugh
Keith Mcmaugh
2 months ago
Reply to  Andrew Fisher

Kleptocracy is many a splendor thing. Other shady schemes are : Trump is accused of grifting 250 million off Stolen Election, our not too effective littoral warships cost? 1 billion?,
Our much criticized F35 cost over 90 million, our good buds in Ukraine have been accused of corruption /Kleptocracy ( by Trump).

We do not allow Russia, China, others to have a monopoly on these illegal money matters, indeed, one of the reasons that Ukraine is not getting a tremendous amount weapons is that some of the arms disappear in black markets to terrorists and maybe even Russia, China, Iran, others.

Katheryne Schulz
Katheryne Schulz
2 months ago
Reply to  Andrew Fisher

China did become richer by being Communist, because it was Mao that dragged China out of feudalism and into industrialization. Industrialization is not communist or capitalist per se, it depends on how you structure it. And in China’s case they structured it as state socialism. It’s a bad idea to conflate development or economic activity per se with capitalism. Capitalism strictly speaking is privately owned companies producing goods, and deriving profit from the surplus labour of its workers. There are many ways to structure production of goods and services, just as there are many forms of labour. Gibson Graham is worth reading on this topic.

Kevin Jones
Kevin Jones
3 months ago

Hmm….this seems pretty selective with the facts. Yes, the US dollar was at it’s peak as a reserve in 1999, but it now seems to be at the level it was at in 1995 – hardly a terminal decline.
It has lost it’s “market share” to the Euro, which now accounts for 20% of world reserve. With sterling and yen following behind at around 5% each. This means that western (and a strongly aligned japan) account for about 90% of world reserve currency.
The Renminbi is in distant 5th place with just 2%. And China will never have a world reserve currency with it’s current political system. It would have to open up it’s economy and capital flows to a degree that it would find completely unacceptable. The same for Russia, Brazil and to a lesser degree India.
I know the League of Super Best friends in the photo have announced their intention to create some new basket currency, but it seems light on details. Maybe it will work out, I’ve no idea, but the author doesn’t tell us anything about how it possibly could.

Why So Angry
Why So Angry
3 months ago
Reply to  Kevin Jones

It’ll happen when it does, the same with the tonnes of doubts how a backward & messed up country like China could ever get their act together to develop themselves 30 to 40 years ago. The same naysayers who haven’t kicked their buckets and are still around today & are not suffering from alzheimer, they are mostly in denial till they’re totally speechless.

michael harris
michael harris
2 months ago
Reply to  Kevin Jones

What will they name their new currency BASKET? How about the CASE?

Carlos Cheng
Carlos Cheng
2 months ago
Reply to  Kevin Jones

India starts using Yuan to buy coal from Russia.. perhaps the chinese Yuan will be used in BRICS as a start

sifiso mhlongo
sifiso mhlongo
2 months ago
Reply to  Kevin Jones

History being the best teacher has taught us that no empire lasts forever. So believe you me, it will happen. The technical details are a mystery to all but that shouldn’t make any one doubt. Pull yourself out of the present and you will see that western power isn’t forever.

Liam F
Liam F
2 months ago
Reply to  sifiso mhlongo

indeed . kinda depends how you define “empire” though? Empires that comprise unwilling nations states (tribes ) eventually do decline. But that includes Russia and China too. and indeed the EU.
But to totally misquote Keynes, They can remain unjust longer than you can remain solvent.

Last edited 2 months ago by Liam F
Keith Mcmaugh
Keith Mcmaugh
2 months ago
Reply to  sifiso mhlongo

Australia, NZ, Canada, America are the offsprings of the British Empire.
India, HK, Singapore, others are the illegitimate children of a master /servant relations.
Western power will reside somewhere, somehow, be it in culture, music, financial, legal process, or language. Whether we like it or not.

Ian Stewart
Ian Stewart
2 months ago
Reply to  Kevin Jones

Agreed. Doesn’t stop the usual doom mongers in these comments from claiming we’re toast.

Emre 0
Emre 0
3 months ago

One thing that’s quite surprising is the lack of news from the rest of the world in the West. There’s a kind of information embargo where Western readers oftentimes don’t get to read what the rest of the world thinks or says, or so it seems to me. As a speaker of non-Western languages, I’ve often found it odd how information felt more closely policed for the Western audiences who are meant to be freer where many things couldn’t be said on TV or written.
I was glad to get some confirmation on this from the following Chomsky article, in particular regarding the situation in Russia:
https://www.commondreams.org/views/2022/06/25/not-justification-provocation-chomsky-root-causes-russia-ukraine-war

Last edited 3 months ago by Emre Emre
sina b
sina b
3 months ago
Reply to  Emre 0

True. For instance, although people here in the West can express themselves, their voices are not heard if they cross the line with mainstream media. When someone tries to give an alternative view/opinion on tv/radio, she or he is silenced with a thank you for your call or please leave the studio. Others will just feel intimidated to express similar views and would rather keep silent than getting slammed. Media has the upper hand but when they can’t control the people like what happened in France during the riots, then policing then is the solution. The BRICS skip the first part and use force straight away.

Last edited 3 months ago by sina b
Chow Tai Tat
Chow Tai Tat
3 months ago

America is forcing it’s unnatural lifestyle onto normal people and countries

Keith Mcmaugh
Keith Mcmaugh
2 months ago
Reply to  Chow Tai Tat

Don’t blame it all on America.
Normal people and countries should know better, n’est pas??
After all, there are countless examples of American truths / lies. And Good/ bad/ugly.
Just trust your eyes and believe what you see and not talk, talk, talk where Geico insurance can be sued for millions for a sex disease ( caught in a car).

Jason Highley
Jason Highley
3 months ago

And who would want to hold FX reserves in dollar when – anytime the regime decides they don’t like the cut of your jib – they can simply freeze those assets entirely!
Post-Bretton Woods order is rising. Energy is the truest currency now, and the West decided energy was a joke that could be toyed with without consequence decades ago.

Saeed Farid
Saeed Farid
3 months ago
Reply to  Jason Highley

Exactly. And let’s remember the dollar is not backed by the oil anymore as the Saudis did not renew the agreement after 50 years…so it’s just paper…Worth nothing

Keith Mcmaugh
Keith Mcmaugh
2 months ago
Reply to  Saeed Farid

S F, very, very significant.
The non renewal is a tremendous date in history and a turning point that most do not fully comprehend and appreciate. US$ now is only as good as its economy /GDP.

Troy Davidson
Troy Davidson
3 months ago

To me it seems like countries want to dominate the world instead of share the world. China, Russia,India all want to be respected and equal but their actions are combative and irresponsible for a global economy. We are going backwards and will end up in a WW3 problem if we and I mean the planet don’t learn to work and live together in peace. Unfortunately humans talk peace but prefer to destroy. That’s the way it was and that’s the way it is and sadly that’s the way it will be.

Saeed Farid
Saeed Farid
3 months ago
Reply to  Troy Davidson

The UK and the USA also dominated and didn’t share….and now they are not dominant and would love to share.

Laza Kostic
Laza Kostic
3 months ago

The decline of whatever is referred to by the notion of “West” started in its very inception. The idea of the “west” is based on an hypocritical premise of superiority and on the creation and exclusion of the other as an inferior sub-human/culture/value. This premise is violence itself as it can only exist by continually creating divisions. It maintains its hyped existence by enforcing the fragmented, uprooted and divided “sub-cultures” to emulate itself. In this sense, what you refer to by emulate is the “western” folly of playing a god as in “I have created you in my own image. It is intrinsic need of every culture to maintain its integrity and nurture its roots, and not to be uprooted nor to imitate/emulate the other. In terms of resources, the “west” hardly has enough to support its own material existence and thus the “other” must remain solely its plantation. Plantation and enslavement of the other are in the very root, and are inseparable for what the antagonistic notion of the “West” and the “reset of the world” stands for. The birth of BRICs is simply part of the natural development of history, as there is no such thing as sub-human or sub-culture.

Daniel Moore
Daniel Moore
3 months ago
Reply to  Laza Kostic

This is my favorite reply here. At the end of the day, all wars are over religion. It’s the monotheistic “my way or death” West vs. the polytheistic China/India/Russia (Russia’s technically Christian, but has historically been happy to serve as vassal to the Mongols).

harry storm
harry storm
2 months ago
Reply to  Laza Kostic

Assertion after assertion based on very little in the way of fact or history.

Joan Wucher King
Joan Wucher King
3 months ago

In the far distance, a unicorn trots towards the horizon…then, nothing. We had this discussion a few years ago, and it was wisely put to sleep. A BRIC challenge to the global reserve and semi-reserve currencies? The world may have cause for concern over Brazil and Agentina, but their insolvency in the short, medium and long term is equally compelling.
India has had more resurrections than Ghandi had reincarnations, and remains riven by sociopolitical divisions on an enormous scale. They may grow rich, but with a hell of a lot of poor people in train.
The hot players are China and the Russian petrostate. The flaws in China’s engagement have been flagged below. And if petroroubles were the entrance point for reserve currency status, let’s go full tilt and throw in the Gulf States and Nigeria.

Last edited 3 months ago by Joan Wucher King
Keith Mcmaugh
Keith Mcmaugh
2 months ago

Ya, but, in the coming decades, climate change, droughts, famine will imperil the western world with quite a few migrants. The Currency debate will take a lesser importance.

Omair Shafiq
Omair Shafiq
3 months ago

Interesting however we should remember what history has taught us

1) The idea of a neutral currency reserve that is not the sovereign right of any one nation was presented at the Brettom Woods conference itself, wherein a virtual currency would be used in international dealings with the world net being brought to zero at the end of the year, however the USA itself forced upon the conference to accept the US doller as the standard given it had the authority to do that then, further justifying it with pegging it to gold. Which later again it removed using its influence.
Point is, influence is important in deciding something as important and powerful (you could even call it American imperialism) as a world currency.

2) However its not all about power, but isolating the world economy from domestic disasters like 2008. The idea of a new currency is not new for one thing, the Euro, the Asean Monetary Unit created after 2008 was also a bid to insulate Asean from something as volatile as the American mortgage insurance market.

3) This might be the mot important however and that is consensus. Each of the brics is fairly independent of each other and acts of its own independent objective. To even think of it acting as a single body would be delusional to say the least as each of these countries have their own problems and set of agendas. In my humble opinion none of them have liberal views and use raw realism in their international affairs. Something that Russia has recently displayed openly.

So this might not exactly be the way you portrayed it but it surely shows the weakening grip of the US and Europe on the world and the changing of world order

sashsash sash
sashsash sash
3 months ago

World dominance by bullying tactics by the USA and UK has to end.

The wars instigated so that iraq oil becomes usa oil and similar in so many cases, MUST END.

OF COURSE USA will do all it can to regime change to cause brother to fight brother in order to keep its dominant bullying tactics.

That world is over, and the usd total dominance is over.

Good luck to the Bric.

Why should so many other countries have sanctions imposed and assets stolen.

Changing world order is evolved.

If Russia can pursuade China and India to come to peace and together form alliance.

Would be at least as powerful as nato.

harry storm
harry storm
2 months ago
Reply to  sashsash sash

more absurd fact-free assertions. “If Russia can persuade China and India…”
As I recall, China and India recently had a mini border war. I doubt Russia in the state its in can do much persuading, particularly with regard to countries with bad blood that see themselves as rivals. The hope for a Western takedown is so strong with some people.

Edwin Blake
Edwin Blake
3 months ago

Wow. “… these upheavals could drastically impact Western living standards and our place in the world”. What?! How?
Preventing neo-colonial exploitation seems to be the only mechanism that explains that hyperbole. If only!

Actually the BRICS countries are far too divided. India and China fight wars. Many are terminally corrupt. Not much chance, unfortunately, of their achieving anything much any time soon.

Jeanie K
Jeanie K
3 months ago
Reply to  Edwin Blake

There is nowhere more corrupt or warlike than the USA political “elite”

harry storm
harry storm
2 months ago
Reply to  Jeanie K

Actually lots of places are more corrupt and warlike. Starting with Putin’s Russia, which is currently bogged down after its invasion of a sovereign neighbour.

Matt M
Matt M
3 months ago

I recommend a YouTube channel called Joe Blogs which is an ex-PE analyst doing 10 minute videos on financial stories related to the Ukraine invasion.
This morning he covered the Iran and Argentina BRICS applications and threw cold water on the whole thing. He recounted that Russia has been trying to interest her BRICS partners in creating a SWIFT payments alternative for years but they could never reach any consensus and always wanted to pursue their own payments system.
There is very little similarity between these countries and it seems unlikely they will be able to put aside their own national interests long enough to agree a new reserve currency.

Henry Ruiz
Henry Ruiz
3 months ago
Reply to  Matt M

These nations do have big differences and I think really don’t like each other. They tolerate each other because of their needs and their hatred towards the WEST (U.S.). I think it is possible that they would unite to remove the West. I really don’t believe these countries want to be part of the world reserve currency. They want to BE the world reserve currency. The U.S. united with Communist Russia to fight the Nazis of Germany, and united with China to fight Japan during WW2. Ironic. Past tolerated adversarial allies have become U.S. threats.

Saeed Farid
Saeed Farid
3 months ago
Reply to  Matt M

The BRICS members are already been trading amongst each other on their own payments system for a while now…..they haven’t used swift for a long time …..that’s what led to lower dollar dominance and its collapse…..hence the US narrative on the war …..throwing their toys out of the pram…

Peter B
Peter B
3 months ago

What is this strange idea that you can take a group of countries with very little in common culturally, politically or economically and assume they all get along just fine and will form a stable, lasting alliance ? If that were the case, then perhaps it might be justified to add up all the parts and assume the effective total is the sum of the parts.
But it is not here. Does Argentina really have that much in common with Russia (apart from high inflation) ? Or Iran with Russia ?
Opposition to the US is not enough to create a lasting cooperation. This idea is a fantasy. It is also a “loser’s club” of countries without leading economies (China perhaps excepted) which have problems far greater than the US or the West – and far lower proven competence in addressing these problems.

Saeed Farid
Saeed Farid
3 months ago
Reply to  Peter B

A monetary collusion is determined by gold and commodity reserves….that’s what they have in common…..for a monetary system that’s what is important….not cultural cohesion….

Andrew Vigar
Andrew Vigar
3 months ago
Reply to  Saeed Farid

Collusion indeed; the markets in oil, gas, gold and crypto sank further into the red today (Thurs). This post gives an indication of why.

Kat the contrarian
Kat the contrarian
2 months ago
Reply to  Peter B

“China perhaps excepted.” No kidding. “Loser’s club” says alot about you and the American way of thinking.

Last edited 2 months ago by Kat the contrarian
Keith Mcmaugh
Keith Mcmaugh
2 months ago
Reply to  Peter B

Peter, you have good points, however those Losers have a dangerous potential : huge populations. With climate change, there will be upheavals of people to cooler places. Droughts and water shortage and maybe famine
also will drive people to move.
Too much over crowding is a wonderful opportunity for viruses to explode.
The dominant US dollar benefits the west, mostly, so if it benefits ALL, then maybe the world can try to solve some of its own problems.

Emre 0
Emre 0
3 months ago

In today’s high culture these men would be described as a bunch of misogynic heteronormative cis-gender white supremacist/adjacent far-right homophobic racists.
It’s not a big surprise then Western leadership of the rest of the world is weakening, for in all likelihood not many in these countries would even understand what people in the West (in particular English speaking countries) are talking about let alone follow their lead.

Alexander Richards
Alexander Richards
2 months ago

No doubt there is a rift/shift in globabal power ballance. Growth is in the East. East can learn what not to do. It’s a fantastic oportunety to set things right. The world needs sensible, capable strong leaders who do not drive economies into the wall, as they have done in the west. Visionaries, with a moral compass driving sustanable growth. Learn from what has been done in the west in the past 100 years. There is now a oportunety making the world a better place and take the lead in ESG “The World 2.0” I live and worked in Brics (Not Brazil) for now 30 years and I know its time for change. I hope leaders in the east has learnt from the west what not to do, If East keep family values, environment, sustanable growth & responsible governance in focus we will all enjoy a fantastic ride. Do, but do right this time ✌️

Brian Villanueva
Brian Villanueva
3 months ago

The entire idea of a “basket of currencies” being a reserve currency is a little absurd. Such a basket is only as stable as its most stable member. Argentina? Really? Brazil? Powerful, sure, but not particularly monetarily stable.

Call me when the Chinese realize they don’t need the rest of these losers.

Saeed Farid
Saeed Farid
3 months ago

It’s as stable as the commodities they possess. ..and their gold reserves…..and they have enough of those. More than enough

Gee Bee
Gee Bee
3 months ago
Reply to  Saeed Farid

Not too absurd, when you look at each member of brics bloc lowering their USD reserves since 2013 when they agreed on the New Development Bank. At the current membership, the Brics nations supply 1/3 of the world’s food supply, have a population over 3B, 31% World GDP, have almost 30% of the land mass of the world, China and Russia holding the largest Gold reserves. China and Russia in the top 3 of energy producers. South Africa having over 50% of the world’s unmind gold reserves, China the largest Gold producer.

The rates of lending from NDB are lower than IMF and World Bank, with loans currently being given half in USD and Local currency. Developing countries and emerging markets will definitely be lining up to get loans from this AA+ institute. Further investors of the Bank are UAE, Bangladesh. Brics looking alot more attractive to many countries than what Western media make it out to look. Also, IMF has indicated that Brics would be responsible for 50% of world trade by 2030.

As far as trade goes the Bloc have already moved away from the Swift system and use their own “Swift” payment system in place which does not use USD, and each member can pay using their own currency, Brics Pay.

Adam Bartlett
Adam Bartlett
3 months ago

One would certainly hope they’re planning for this. For more than a decade, China has been pushing for RMB to increasingly grab place from USD as both a reserve & settlement currency. It must have been blindingly obvious that freezing Russia’s USD would dramatically increase the odds of this sort of play by the Brics. So hopefully this is what the white house wanted, reducing the “curse” of reserve status hurts them in some ways, but helps them in others, e.g. by reducing the triffin dilemma. All depends on what parts on the economy they wish to favour. It could help the on-shoring trend, for example.
If it’s not planned, them I guess freezing Russian’s foreign reserves was a case of SJW’s getting their way over national strategic interest…

Arthur Rodrigo
Arthur Rodrigo
3 months ago

A very good idea, NATO was always a white man’s organization, it’s time they were put in their cage.

Angeline Thompson
Angeline Thompson
3 months ago

Even me too North America my family want to join the brick. .. aboriginals. . Be patient for us. We are currently oppression, I want to walk with you men I own my home lands and I make good decision

Angeline Thompson
Angeline Thompson
3 months ago

I love the name brics

Gabi Dipla
Gabi Dipla
3 months ago

I expect Turkey and Pakistan to join them soon, and even countries like Serbia or Morocco

Vincent Herriau
Vincent Herriau
2 months ago

As classical economics have it, a “currency” is essentially three things : (i) a unit of measurement (of value), (ii) a means of exchange (or payment) and (iii) a store of value.

Defining the BRICS currency as based on a basket of commodities settles the first question.

The means of exchange issue is, as always has been, two-layered : inside a country, based on (i) that country’s clearing system, and (ii) the ability of the country’s currency to settle all debts originating in the country; and between countries by, indeed, the obligation of central banks to hold reserves in order to be able to make the payments initiated by their own nationals.

A system where every country has to keep reserves in every other country’s currency, and with every other country’s central bank, for debts to be settled every day, would be impractical.
Enter CIPS, China’s rival to SWIFT, and central bank liquidity (swap) agreements. Both can accommodate the new reserve currency in their transactions, with the sole blessing of the Chinese authorities.

This however does not fully address the store of value issue.
At the end of the day, any value is based on actual value – something of value that one actually, physically holds, or promised value – an obligation by a third party.

At the end of the day also, a creditor’s claim is only worth his debtor’s ability (or willingness) to pay. No system can escape this one essential rule.

What is probably new is the ability of two of the members to be net lenders / creditor’s in the system. Both China and Russia have large current account surpluses, have been reluctant to hold USD denominated assets, and will rather hold BRICK denominated claims on third parties, thereby providing the system with viability and critical mass. For these two countries to hold BRICK denominated claims on their trading partners is a no brainer.

If other countries or economic agents would hold positive BRICK balances one woul want to ask : “who is the trusted debtor guaranteeing liquidity and convertibility ?”

Keith Mcmaugh
Keith Mcmaugh
3 months ago

In Nature, over use of anything will render it ineffective, such as antibiotics. Americans weaponizes every thing: Lies, currency, Swift, sanctions, mass media, alliances, tariffs, Hegemony, Containment, on, and, on and on.
The rest of the world is finally making head way in countering the same old colonial – type suppression.
It wouldn’t be quick but very slow. G7’s 600 billions$$ to compete with China’s B&R will be fascinating as USA can not even approve its own Infrastructure bill last November. Indeed, the bottom half of America desperately needs this new G7 spending.

Drew Summs
Drew Summs
2 months ago

I’m not as smart as some of you people commenting here. I strongly feel this leading to major war correct me if I’m wrong but the one thing the U.S. is willing to fight for more than oil would be anyone who wish to challenge the dollar?

Hock Soon Cheong
Hock Soon Cheong
2 months ago

why should the west be allowed to continue with its hegemony, when it is obvious they have abused it over and again
competition to do good and better is always preferable to not having a choice

Peter Mott
Peter Mott
3 months ago

Has there ever been a reserve currency without a nation and a central bank that issued it. The euro? But then Brazil, China and India are going to create some sort of monetary union? Seems crazy really. They could use the yuan I guess, though they would need to trust China – no chance.

Chow Tai Tat
Chow Tai Tat
3 months ago
Reply to  Peter Mott

America loves war ..it’s extremely profitable

jeff coll
jeff coll
3 months ago
Reply to  Chow Tai Tat

And China loves killing it own people, since the Chinese Communist Party has come into power they have killed millions of their own people, invaded Tibet and Inner Mongolia and constantly threatens Taiwan.

Ludumo Jawula
Ludumo Jawula
3 months ago
Reply to  jeff coll

America survives on bullying and threatening other countries. If you do not agree with them be ready to be sanctioned…

Keith Mcmaugh
Keith Mcmaugh
2 months ago
Reply to  jeff coll

USA has over 1 million covid deaths. Critics complain that it is due to lack of adequate health care for many of those deaths, which is shameful for the number 1 economy.
America over its many wars has also caused millions of deaths and destruction through out the globe.
There are no Angels on this planet.

Dan Abreu
Dan Abreu
3 months ago
Reply to  Peter Mott

There has never been a reserve currency without a nation and a central bank. All those require trust to an external nation or corruptible central bank.
After 12 years in the cooking the brave new coin increases it’s chances to become the trustless global currency without counterparty risk. The world hasn’t realized Bitcoin will be it, we are too early.

Saeed Farid
Saeed Farid
3 months ago
Reply to  Dan Abreu

Bitcoin would and could never be it…any currency has to possess inherent intrinsic value…bitcoin has no inherent intrinsic value. It cannot be touched or seen or used by the masses and is Internet connectivity dependent….one minute it’s 68k and then 19k so hence could not be used as a consistent value to pay workers. I do believe it will stick around for a bit though…..finally is not backed up by anything of value….like the dollar is not backed by the oil anymore…so it’s just paper…..finally the BRICS currency has a BRICS central bank backed up by nations who possess oil, gas gold and silver and all commodities we eat….which is what money is…..China and Russia possess the largest gold reserves in the world. If one puts together all the gold reserves of all the other remaining central banks including the BoE and the FED they don’t exceed the total gold reserved of China and Russia…..hence that’s the problem the west has engineered for itself.

America loves war but can no longer afford it and exited with their tale between their legs from Afghanistan….Russia china observed that as very telling.

The rouble has dominated the dollar of late more than doubling and have higher gold reserves…..hence the world deserve to have a reserve currency which is actually worth something….and not just paper aka dollar

Saeed Farid
Saeed Farid
3 months ago
Reply to  Peter Mott

Well would trust china more than the USA ……whi just stole 340 billion of Russian reserves …..so nobody is going to trust them anymore…..hence the move to create the alternative BRICS

Peter B
Peter B
3 months ago
Reply to  Saeed Farid

This is a blatant lie.
1) The sanctions against Russia *freeze assets*. That is completely different from *confiscation*.
2) The sanctions were agreed and actioned by a very large number of countries. It is not just the USA acting here.

jeff coll
jeff coll
3 months ago
Reply to  Saeed Farid

Russia you mean the country that said It would NOT invade the Ukraine and then invaded. Russia is responsible for thousand of dead innocent men, women and children. How could anybody trust Russia again

Ludumo Jawula
Ludumo Jawula
3 months ago
Reply to  jeff coll

What about America in Irag and Afghanistan. Wars that where based on lies that even the United Nation was against..

Bestman Tye
Bestman Tye
3 months ago

The political Powers in the world can be balanced with two Strong opposing economic blocks.

making_ Reality
making_ Reality
3 months ago

Fighting against the poor

Long years have passed since humanitarian aid, was and is needed in such emergent countries. Several movements were created to help small, explored economies. Brasil, India, South Africa, even China along the past history have been dominated by colonial powers. It always was just a question of time to get the reverse of the situation. A major critics of West always was Russia, that gave weaponry and know how to colonized countries to set free of their oppressor. All Africa, South America, Asia and Oceania will join in one single voice – a brotherhood of oppressed countries with European colonial past.
Just thinking what will USA do about it. And if we are talking in a USA Vs Rússia (very unlikely), or a China Vs USA (more likely), but for sure a Brasil, Africa and India Vs ex colonial powers.

harry storm
harry storm
2 months ago

What collapse of Western sanctions? What’s the author talking about?

Charles suarez
Charles suarez
3 months ago

Why are you guys worrying about the West. They are all certified guys and gay makers.

P.N.Sukumaran Pockkan Nanoo
P.N.Sukumaran Pockkan Nanoo
2 months ago

In all forms of Social and Economic growth, diversifecation , we should support the formation BRICS nations, on a level playing field with Western Nations.
In age of AI/IT era, recommended to introduce Crypto as BRICS official currency.
Nuclear energy should be used for developing a nation and not used as veapons of destruction.

Last edited 2 months ago by P.N.Sukumaran Pockkan Nanoo
Yunusa Salihu
Yunusa Salihu
2 months ago

This Is indeed a welcome development and a very good news to hear. It will be a great economic milestone expecially for the less developed nations to have alternatives.

However, this must be carried out with utmost caution and considerations of other potential global threats that may accompany this giant movement.

Nicky Samengo-Turner
Nicky Samengo-Turner
3 months ago

India is the important country here, and alongside Israel should be our closest allies

Bolade Fabuluje
Bolade Fabuluje
3 months ago

Let’s see what happens in the next couple of years

Bbaale Hussein
Bbaale Hussein
2 months ago

I think it’s high time to balance the equation

Elinor Munday
Elinor Munday
2 months ago

Comments regarding: “March 9, President Biden signed an executive order directing the government to begin developing a “central bank digital currency” (CBDC) to be issued by the Federal Reserve, alongside a framework to regulate private cryptocurrencies. But this was a moment to which close attention is very much due” taken from https://www.city-journal.org/central-bank-digital-currency-caution

jeff coll
jeff coll
3 months ago

There not what you call great countries, mainly consisting of autocratic or poorly run corrupt countries.

Jeff Andrews
Jeff Andrews
3 months ago
Reply to  jeff coll

Maybe they should reserve the names and meanings of these trading blocs to ‘bankrupt west’ and ‘rich east’ or something along those lines.
When this gets going we’ll be lucky if anybody accepts our printed money or even sells us the essentials.

Rupert Steel
Rupert Steel
3 months ago

The author misses a point of critical importance. A viable currency must be dependent on a sovereign, and the BRICS lack a sovereign, just as the EU lacks a sovereign. It follows that without a political union that permits creation of a sovereign power, the BRIC currency will be the subject of bouts of instability, like the EU. And who would seriously want Argentina and Iran in their group? Argentina would only be joining to find a different sponsor to the IMF. It’s disappointing that India and Brazil see their future in association with the two leading autocracies.

Ludumo Jawula
Ludumo Jawula
3 months ago
Reply to  Rupert Steel

To each and every country where there’s no stability when you research deep down you will surely discover that America or Britain, France too are responsible…

Keith Mcmaugh
Keith Mcmaugh
2 months ago
Reply to  Rupert Steel

However, “sovereign “could also be corrupt.
When Trump returns to our WH, we too can join the Autocracts and be their undisputed leader.

Anthony Pilolli
Anthony Pilolli
2 months ago

These BRIC countries have always tried to break and scorn the western economic system. Would a similar alliance of BRIC nations succeed and be more successful than the west? Probably not. All these countries(including China) are still underdeveloped and have chronic corruption.
And unlike the west and it’s allies, BRIC has few values and vastly different interests among them. Cohesion is among them is spotty and these countries still have to deal with the west no matter what.
They’ve been having these ‘summits’ for years and nothing fruitful has ever come from them. And whose side is India on? It joined the Quad against China but yet helps fund Russia’s war chest by buying much oil at discounted prices. India has blood on its hands in Ukraine itself.

Colin Macpherson
Colin Macpherson
2 months ago

China has a lot to lose, Russia is bankrupt, Argentina is a lame duck, India will try to compete with China, Iran is Iran and Africa is a basket case and will be raped of its resources!

Angeline Thompson
Angeline Thompson
3 months ago

Such a handsome picture

Ian Stewart
Ian Stewart
2 months ago

Russia has descended into a civil war that will ultimately destroy their economy for thirty years.
India is descending into a civil war that will probably come about in the next 5-10 years, and which will suck in Pakistan and possibly Bangladesh, destroying their economies for the following thirty years.
Iran will eventually go to war with Israel and be destroyed, economically and physically.
Who’s left? China, South Africa (in terminal decline already) and Brazil.

Keith Mcmaugh
Keith Mcmaugh
2 months ago
Reply to  Ian Stewart

Don’t leave out the Disunited States. California, & Texas, always feels and desires independence. Or that Scotland, Ireland will exit UK.
Maybe Kashmir from Turkey. Pakistan can barely hold Balochistan.
In Canada, Quebec is a defacto separate country.
Israel’s survival depends on population.
Demographic researchers armed with PhDs has warned that Europe will be Muslim majority by end of the century, ready for the Islamic Republic of Francestan??? Notre Dame to be a mosque?
The map of the world will be interestingly different 50 – 100 years from now.

Mr Sketerzen Bhoto
Mr Sketerzen Bhoto
3 months ago

Presumably there can only be a direct challenge to the US dollar if the BRICS create a currency. And so what? Sterling is going strong (enough) despite not being the reserve currency. The euro is somewhere between useless and a disaster ( except for travelling within Europe).

As for the last paragraph. No. They don’t.

Saeed Farid
Saeed Farid
3 months ago

Sterling and dollar look strong ….I mean look at the dollar index…..strong enough……

But when a citizen walks into Walmart the dollar does not buy much……extremely less….becoming more and more worthless…

The rouble has more than doubled against the dollar….

After sanction 1 USD was equal to 140 Roubles….

…and now 1 USD is equal to 58 Roubles…..the dollar has been truly smacked around and yet artificially they show the dollar index at 104….

So this is all mis information by the west…..JPM has come out and said he Rouble is by far the strongest currency around right now…..backed by large gold reserves …oil….gas…..wheat and all major commodities…….

Things the US and UK don’t produce enough of…..

Peter B
Peter B
3 months ago
Reply to  Saeed Farid

You do know that the US is self sufficient in oil don’t you ? And that its shale oil is now very profitable.
Or don’t you do facts ?
Just remind me – what is the inflation rate in Argentina these days ? And the dollar exchange rate there ? It used to be pegged at 1:1.

Ludumo Jawula
Ludumo Jawula
3 months ago
Reply to  Peter B

You must be talking to yourself. Why do you think America is having problems with most of the oil producers..

Last edited 3 months ago by Ludumo Jawula
melvin george
melvin george
2 months ago
Reply to  Peter B

Melvin, There is s lot problem who need to be solved.One of them is war on Ulraiana.If Russia win dolar is done same as West.Melvin George.

harry storm
harry storm
2 months ago
Reply to  melvin george

absurd.

Dermot O'Sullivan
Dermot O'Sullivan
3 months ago

Help, the BRIC is falling!

Saeed Farid
Saeed Farid
3 months ago

The BRIC is falling on the dollar !