Putin and the BRICS want to create a new currency
At the 14th Brics summit, Putin stated that the group intends to create an international reserve currency. All the details in the article by Mario Lettieri and Paolo Raimondi
On the occasion of the 14th BRICS Summit (Brazil, Russia, India, China, South Africa), organized in Beijing at the end of June, Russian President Vladimir Putin announced that member countries are preparing to create an international reserve currency.
Speaking electronically at the Brics Business Forum, he said: “The Russian financial messaging system is open to connect with banks, thus projecting the need for a BRICS reserve currency. The Russian Mir payment system is expanding its presence. We are exploring the possibility of creating an international reserve currency based on the basket of currencies of the BRICS countries ».
After the sanctions imposed by the West against Russia following the war in Ukraine, it is an almost inevitable move, expected by those who analyze political processes with a scientific and realistic approach without ideological dictates or prejudices of any kind.
Among the various sanctions, Russian banks have been excluded from the Swift system of international payments. However, there are other bilateral or multilateral global settlement systems for cross-border financial services, such as the Chinese Cips system. In 2021, the Cips processed about 80 trillion yuan (11.91 trillion dollars), an increase of more than 75% year-on-year. According to Swift data, the yuan maintained its position as the fifth most active currency for global payments in April, with a share of 2.14% of the total.
For quite some time, the BRICS have been intensifying cooperation in investment and financing of major sectors such as strategic emerging industries and digital innovation in an effort to increase the use of local currencies in trade and payments, so as to bypass the dollar. It should be borne in mind that the sanctions against Russia were not supported by the other BRICS countries which, instead, they interpreted as the transformation of the dollar into a weapon of war.
Europe continues to underestimate the economic and political role of the BRICS, to ignore them as a potential coordinated system and instead consider them only individually. The blockade of these countries, however, accounts for 18% of trade in goods and 25% of foreign investment globally. Despite the impact of the pandemic, the total volume of BRICS trade in goods reached nearly $ 8.550 billion in 2021, an increase of 33.4% year-on-year.
It is certainly true that they are not comparable to the European Union, but to think that they are a group without a future is a political myopia, a vision that is not at all realistic and certainly not intelligent. It would be enough to note that 14 other nations were invited to the recent “Plus” Summit: Algeria, Argentina, Cambodia, Egypt, Ethiopia, Fiji, Indonesia, Iran, Kazakhstan, Malaysia, Nigeria, Senegal, Thailand and Uzbekistan. We acknowledge that there is a part of the world, the majority of countries on the planet, which is often not in tune with the West and which has different interests, priorities and projects. Ignoring them could be in the interest of some, but not of Europe!
It should also be borne in mind that the New Development Bank, the BRICS bank, which operates very efficiently to finance concrete development projects and promote the use of local currencies in businesses, has recently included among its members 4 other countries, Egypt. , Bangladesh, the United Arab Emirates and Uruguay.
The final declaration of the Beijing Summit, in addition to detailing the various aspects of the BRICS program for a Global Development Partnership, announced its intention to include other countries. Together with the Chinese perspective of a Global Development Initiative, this was a central point of President Xi Jinping's speech.
Even if the alternative "basket of coins" does not appear in the final statement, it will certainly be one of the crucial aspects of future work. This can be understood by seeing the emphasis placed on the importance of the Payments Task Force, the platform for cooperation in payments between central banks, on the creation of the Trade in Services Network, the use of innovative financial instruments in trade, and on the strengthening and improvement of the mechanism known as Contingent Reserve Arrangement, i.e. the BRICS global financial and monetary security network.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/putin-brics-moneta/ on Sun, 14 Aug 2022 06:09:28 +0000.