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BRICS dumping the Greenback?
KUALA LUMPUR, Oct 24, 2024: At the pre-BRICS Business Forum in Moscow on Oct 17 and 18, a new cross-border payment system called BRICS Pay was introduced.
As of August 2022, 149 countries and 32 international organisations have signed Belt and Road Initiative (BRI) cooperation agreements with China.
In 2021 alone, China’s total trade with the BRI countries was a jaw-dropping 11.6 trillion Yuan (US$1.7 trillion). It’s not rocket science why King Salman and Saudi Crown Prince Mohammed bin Salman are shifting to the East.
Yes. The Greenback is seriously being challenged as the preferred global payment currencvy system.
No News Is Bad News reproduces below a news report on the business summit:
159 Out Of 195 Countries Join To Launch BRICS PAY To Dethrone US Dollar As Global Reserve Currency – De-dollarisation To End Western Financial Hegemony
24 October, 2024
As of August 2022, 149 countries and 32 international organizations have signed Belt and Road Initiative (BRI) cooperation agreements with China. In 2021 alone, China’s total trade with the BRI countries was a jaw-dropping 11.6 trillion Yuan (US$1.7 trillion). It’s not rocket science why King Salman and Saudi Crown Prince Mohammed bin Salman are shifting to the East.
BRICS unveils game-changing payment system to challenge Western financial hegemony
In a pivotal moment for the BRICS economic alliance, the “BRICS Pay” system was officially unveiled during the BRICS Business Forum held in Moscow a few days ago, as part of the ongoing BRICS summit for 2024. In a symbolic gesture of the group’s commitment to launching the system, BRICS payment cards were distributed to participants at the forum. These promotional cards contained 500 Russian rubles, equivalent to approximately $5.20, and were utilized for purchasing coffee or souvenirs at the event. The cards featured a dual-sided design, with a QR code on one side and detailed instructions on how to use the card for payments on the other. This initiative comes in response to the United States’ use of the dollar as a tool for sanctions and the soaring levels of US national debt, prompting countries, particularly those in the BRICS group, to enhance the use of national currencies in international trade.
The unveiling of the BRICS payment system represents a significant advancement towards the goal of de-dollarization, a decision that has been long anticipated. This system has been under development for several years. According to media reports, BRICS nations have been working since 2019 to establish a unified payment system as part of a retail payment and financial transfer platform for member countries. A year later, the BRICS summit announcement in Moscow, issued on November 17, 2020, commended the ongoing efforts to enhance cooperation among national payment systems, particularly the establishment of the BRICS Payments Working Group, and expressed hope for further progress in this endeavour, as reported by the Xinhua News Agency.
Last year, following the BRICS summit held in Johannesburg, which included the five member countries with emerging economies (Brazil, China, India, and South Africa), the United States downplayed the success of this bloc in potentially undermining the dominance of the dollar. This was particularly evident given the momentum surrounding the summit, especially regarding the possibility of member countries issuing a new currency for intra-group trade that could challenge the US dollar. Additionally, there has been a surge in requests for membership, as the group has opened its doors to expansion. US National Security Advisor Jake Sullivan remarked that “the United States does not view the BRICS group as a potential geopolitical competitor.”
In response to inquiries about whether Washington is concerned that BRICS might pose an economic and geopolitical threat to the United States, Sullivan stated, “The United States does not believe that BRICS has become a geopolitical competitor… and we do not see the group evolving into any form of geopolitical rivalry or anything of that nature.” He further noted: “The BRICS group, in its current form, consists of a diverse array of countries that have differing views on critical issues in the Indo-Pacific region.”
However, this year, the situation appears to be markedly different. The launch of the “BRICS Pay” system is undoubtedly an effective step that significantly accelerates the process of de-dollarization. The concept behind this mechanism revolves around creating a dedicated platform based on digital currencies within the BRICS nations for financial settlements. This mechanism is poised to disrupt the Western “SWIFT” system’s monopoly on global financial transactions. It represents a positive development for countries aiming to safeguard their sovereignty and commercial and financial freedoms. Additionally, this decentralized mechanism, which will incorporate multiple currencies, will enable the circumvention of Western sanctions and obstacles. It will also enhance the economic influence of the BRICS group and expedite the emergence of a supranational currency, posing a direct threat to the status of the US dollar. Overall, this initiative strengthens the capacity to settle debts and bolsters the economic stability of BRICS member states.
There is no doubt that the BRICS group has experienced significant expansion in its influence over the past five years, having welcomed new member countries such as the United Arab Emirates, Egypt, Iran, and Ethiopia, which has strengthened its economic power. The International Monetary Fund projects that the GDP share of BRICS nations will reach approximately 38% of the global total by 2028, surpassing that of the G7.
Despite the US administration’s denial of the significance of the BRICS alliance as a genuine geopolitical competitor to the existing global order, the success of BRICS is an undeniable reality. This was evident during the first US presidential debate, where former President Trump reiterated his commitment to imposing stringent tariffs on countries attempting to move away from the US dollar as the global currency. He has taken a particularly strong stance against China, threatening to impose tariffs ranging from 60% to 100% on Chinese imports if he is elected.
The BRICS nations are earnestly working towards reshaping the global economic system by developing their financial frameworks. The alliance aims to connect the financial systems of its member countries, facilitating transactions in their respective digital currencies. Currently, approximately 90% of trade between Russia and China is conducted in rubles or yuan, and this practice is expanding, with the UAE and India also entering agreements to settle trade in their local currencies instead of the dollar. Furthermore, BRICS countries are expected to continue discussions on establishing a gold-backed currency as an alternative to the US dollar. This potential BRICS currency would enable these nations to assert their economic independence while competing with the existing international financial system.
Ultimately, it cannot be denied that the implementation of such a project is not an easy task, as the bloc may encounter several obstacles when establishing a global financial mechanism that includes dozens of countries. This is particularly true given the stability of the US economy and the global investors’ confidence in it as a store of value and a medium of exchange. Furthermore, the United States possesses the largest government bond market, which renders the dollar a haven during financial crises. Additionally, initiating this mechanism could provoke pressures from Western sanctions, as the system may pose a threat to the current international financial system dominated by the West. Nevertheless, we are faced with an undeniable reality: the world is indeed beginning to change, and alternative options may become available shortly.
De-dollarization trend
The trend of de-dollarization has been accelerating over recent years, driven by the US wielding its financial sanctions, leading some countries to be unable to settle in dollars and driving them to seek alternative payment systems, Chinese experts said, referring another major reason for having an alternative way of payment rather than the dollar.
For a long time, the US has abused its dollar hegemony, shifting domestic crises and harvesting global wealth by damaging the economic and financial stability and well-being of other countries, experts said.
The establishment of the BRICS payment system poses a significant challenge to the US dollar’s dominance, Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Wednesday.
“For a long time, the US dollar has maintained a dominant role in the international financial system, leaving many countries vulnerable to exchange rate risks and economic pressures… a BRICS payment system will help to reduce reliance on the dollar and offer member nations more independent and secure payment alternatives,” Wang further noted.
A diversified competitive landscape in trade settlement, investment, and reserves is needed to better balance the interests of all parties, experts said, suggesting that this will also foster a new form of cooperation among countries at various levels and stages of development, with the goal of creating a more inclusive and balanced international monetary system.
Circumventing US dollar
In his speech at the summit Wednesday, Chinese President Xi Jinping said “the reform of the international financial architecture” is “pressing,” and he called for “the connectivity” of financial infrastructure among BRICS members and the expansion of the New Development Bank, or NDB.
Headquartered in Shanghai, the NDB was established by the initial five BRICS members in 2015. It serves as an alternative financial institution to the World Bank and the International Monetary Fund.
Tom Keatinge, the founding director of the Center for Finance and Security at the Royal United Services Institute, said China would be inclined to join the new financial system that Russia is advocating.
He said Beijing’s reasons are twofold: “to influence its design to ensure it can benefit” and “to add to its desire to provide counterbalance to the historically unipolar financial system dominated by the United States.”
Keatinge added, however, that the new infrastructure would not be able to easily replicate “the stability, liquidity and convertibility of the U.S. dollar” that a number of other existing bilateral and multilateral payment systems experience.
VOA asked the Chinese Embassy in Washington whether and why Beijing is interested in joining and using the proposed BRICS financial system but did not get a reply.
Citing unnamed experts, China’s state-run Global Times on October 17 said an alternative payment system “may help reduce excessive reliance on the U.S. dollar.”
Sanctions evasion
BRICS’ efforts to increase the use of local currencies are seen as a bid to challenge the global financial system dominated by the U.S. dollar, which accounts for 90% of all currency trading and more than half of international payments.
At the summit, Russian President Vladimir Putin said, “The dollar is being used as a weapon.” He also said the increased use of BRICS national currencies for transactions will “minimize geopolitical risks.”
During a meeting with Putin at the summit on Tuesday, NDB President Dilma Rousseff said the bank was committed to financing the countries of the Global South in their national currencies.
Russian state development corporation and investment company VER.RF signed agreements with China and South Africa to extend credit lines in national currencies, Russian news agency TASS reported on Wednesday.
BRICS Clear, the international payment and deposit platform to ensure increased circulation of national currencies, was proposed by Russia ahead of the summit.
The Russian Financial Ministry, central bank and consulting firm Yakov and Partners earlier in October issued a document proposing BRICS Clear as a platform that would utilize national depository systems “independent of third-party influence.”
Also ahead of the summit, a new cross-border payment system called BRICS Pay was introduced at the BRICS Business Forum held in Moscow on October 17 and 18.
Malaysia
Malaysia among 13 countries officially added as BRICS partners
Apart from Malaysia, the other 12 nations were Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Nigeria, Thailand, Turkey, Uganda, Uzbekistan and Vietnam.
Updated 7 hours ago · Published on 24 Oct 2024 10:44AM
On June 18, Anwar confirmed Malaysia's intention to join BRICS during a discussion with Brazilian President Luiz Inacio Lula da Silva.- Picture from social media, October 24, 2024
MALAYSIA has been recognised as one of 13 nations officially added to BRICS as a partner country, a bloc that collectively accounts for one-fifth of global trade, reported Bernama.
According to an update from @BRICSInfo on X, the bloc officially added 13 new nations to the alliance as partner countries, though not yet as full members.
Apart from Malaysia, the other 12 nations were Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Nigeria, Thailand, Turkey, Uganda, Uzbekistan and Vietnam.
On July 28, Prime Minister, Datuk Seri Anwar Ibrahim, confirmed that Malaysia had applied to Russia to join the BRICS intergovernmental organisation.
Russia currently chairs the bloc, which also includes Brazil, India, China and South Africa.
On June 18, Anwar confirmed Malaysia's intention to join BRICS during a discussion with Brazilian President Luiz Inacio Lula da Silva.
BRICS, originally comprising Brazil, Russia, India, and China, was established in 2009 as a cooperation platform for emerging economies, with South Africa joining in 2010.
The bloc has since expanded to include Iran, Egypt, Ethiopia, and the United Arab Emirates.
According to Bernama, Minister of Economy, Rafizi Ramli, is scheduled to deliver the country’s national statement at the BRICS Outreach/BRICS Plus Summit in Kazan, Russia, on Oct 24, 2024. - October 24, 2024
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