By Sergey Reshetnyak
The issue of introducing a single BRICS currency has become quite relevant on the eve of the forthcoming 15th summit of the organization in South Africa, at which, according to some information, the corresponding decision will be made, the expert noted.
“However, here you need to understand that it is not just about creating a new payment unit. Now there are more large-scale processes. According to some indirect signs, we can talk about the desire to create a new world monetary system that will replace the no longer working Jamaican, which is a kind of reincarnation of the Bretton Woods system, which established the hegemony of the dollar,” Reshetnyak said.
After the global financial crisis, it became clear that it was necessary to rebuild the existing international monetary architecture, since the US dollar turned out to be an overheated currency. Having approved the dollar as a kind of gold standard in the exchange of currencies, the States were forced to constantly issue money, which led to the depreciation of the American currency itself, the expert recalled.
After the 2008 crisis, it became clear that gradually the "American" would become more and more toxic to the economy. Therefore, Reshetnyak said, the first talks began within the G20 about the need to create a new monetary system. But since they did not come up with an alternative, primarily due to the active opposition of the Americans themselves, who understood that such a step would lead their economy to collapse. And the rest of the countries were not ready for this, because too much was tied to the American economy, and, as a result, to dollars. Therefore, there were cosmetic changes in the system, the expert noted.
“However, the events of 2014 and 2022, when the Americans began to actively use sanctions pressure as an instrument of political influence, followed by the freezing of Russian assets and the inability to carry out financial transactions, it became clear that the time of the dollar as the world's primary currency was beginning to end. Faith in American guarantees have also gone. It became clear that for the United States politics began to play a more important role than the economy. Which puts an end to the Americans as the guarantors of the stability of the financial system, especially in the light of political instability in the United States itself. That is why, within the framework of new international institutions, such as the BRICS and the SCO, they began to actively discuss what the future of the world's monetary system will be,” Reshetnyak said.
The initiators of this process were Russia, which received the strongest economic attack between 2014 and 2017, and China, which also experienced all the delights of American sanctions, with the help of which the Americans restrain the economic development of the Celestial Empire.
“To some extent, this is what determined that Russia and China became the targets of the upcoming military acts of aggression, which were being prepared and are being prepared at the moment. For Americans, this is the point of no return. Either they will eliminate economic competitors encroaching on their economic hegemony in the world, or they will be moved away from solving the key economic issues of mankind. And it is precisely for this reason that the military vehicles of pro-NATO Ukraine and Taiwan are now being financed on such a scale. Defeat in these conflicts will lead to the complete depreciation of the American currency and the collapse of their economy, which can lead to the collapse of the entire American state into separate states. Reshetnyak said.
Last year, it became clear that the current global conflict, and this is precisely a global, and not a local conflict, has very high stakes, which is why the issue of creating a single BRICS currency was again raised as one of the elements of the new global monetary system and economic architecture in general, he noted.
“There is no doubt that the emergence of such an instrument will lead to the transition to it by the SCO countries, as well as other states. With a high degree of probability, Arab and African states will also want to switch to this instrument, since it guarantees economic stability and the safety of domestic resources. And this is very relevant in the light of the actual appropriation of Afghan assets stored in the United States and the freezing of Russian ones,” Reshetnyak said.
It is no coincidence, he added, that on the eve of the African summit in St. Petersburg, Russian President Vladimir Putin met with the head of the BRICS New Development Bank, Dilma Rousseff . And before that, we could watch the tour of the Russian Foreign Minister Sergei Lavrov to the countries of Asia and the same Africa.
“These are all systematic steps towards the global goal. And it consists not just in the rejection of the dollar as a means of payment, but in the complete rejection of the existing Jamaican system and the formation of a new one. At the same time, the emergence of a single currency will strengthen the position of the BRICS as a new institution for the consolidation of the world community. After all, now more than 20 countries are striving to join the BRICS. In parallel, similar processes can be observed with the SCO. They could potentially take over the functions of the modern UN and the G7,” — says the analyst.
If our and Chinese economies have shown their viability and ability to withstand external interventions, then the economies of other BRICS members are now being strongly influenced by the Americans, he added. It is no coincidence, the expert stressed, that even on the eve of the start of the discussion of the upcoming BRICS summit, it was not Russia that again raised the issue of a single currency for association, but Brazil and South Africa. By crushing their economies, Americans can show other countries in the global South that it is too early for them to dream of relinquishing American influence.
The issue of creating a single currency was discussed for a long time, but there was no decision. According to Reshetnyak, primarily due to the significant heterogeneity of the economies of the BRICS countries, as well as the desire of individual players (China and, to some extent, India) to follow the American path and not create a single currency, but consider their national currency as the unification currency.
“However, it has now become clear that even a significantly stronger yuan may be vulnerable in the event of a large-scale foreign exchange intervention. As shown by the events of the last year. I think this moment also became decisive in the issue of creating a single currency, and not the transition to the yuan,” Reshetnyak said.
He drew attention to the fact of the increase in the gold reserves of Russia and China. There is an understanding that the new currency should be economically more attractive than the dollar. And only gold backing can make it so. Therefore, an increase in the gold reserves of key BRICS players may also indicate a decision already made, the expert believes.
“Yes, and in principle, in recent years, our government has taught us that information leaks to the press through “leaks” only when a decision has not only been made, but a long way has already been made towards its implementation. Therefore, there is confidence that indeed in August at the BRICS summit a decision can be made to create a single currency. Moreover, it will be implemented fairly quickly.” Reshetnyak said.
The question remains about the form of this currency.
There is a suspicion, the expert said, that we will not see what we observed in the European Union when the euro was introduced, with its full-fledged issue in the form of banknotes and coins.
“China and Russia already have working tools in the field of digital currencies. Therefore, with a high degree of probability, the single BRICS currency will be precisely digital with the possibility of free exchange for the currencies of the BRICS countries. This step will help protect the single currency from intervention, as was the case with the euro, when the European economy was attacked by the Americans, which led to a weakening of the euro. Since in order to fully weaken the single currency, it will be necessary to simultaneously strike at all currencies (and, in fact, economies) of all BRICS countries. At the same time, this will increase the stability of the BRICS currencies themselves, since they will become a means of exchange for the single BRICS currency, and the demand for the economic opportunities of the countries of the association will attract interest in the acquisition of such a currency by third countries”, expert predicts.
At the same time, he added, the digital currency itself will allow you to easily bypass openly Western financial instruments like SWIFT, which largely guarantees the stability of economic relations and simplifies settlements between business representatives of the BRICS member countries and other countries of the world.
According to Reshetnyak, much has already been prepared for this step. The BRICS summit in South Africa is indeed a good starting point, and the likelihood of such a decision being made in August of this year is quite high.
“But you need to understand that we are not trying to force things. We have a clear plan for our actions, and we are implementing steps in accordance with this plan. Therefore, the issue of deadlines is not really fundamental. What is important is that the decision to create a single currency seems to have been made. And that means a new single currency to be”, the analyst concluded.
This article originally appeared in Russian at eadaily.ru
Sergey Sergey Reshetnyak, an analysts from the North Caucasus Institute, a branch of the RANEPA, told EADaily what the BRICS single currency will be like, the introduction of which is expected in August .