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BRICS plans ‘multi-currency system’ to challenge US dollar dominance (geopoliticaleconomy.com)
submitted 3 weeks ago by [email protected] to c/[email protected]
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The BRICS Cross-Border Payment Initiative (BCBPI) will use national currencies, instead of the US dollar. Russia’s finance ministry and central bank released a report detailing plans to transform the international monetary and financial system.

As the chair of BRICS for 2024, Russia proposed the creation of a BRICS Cross-Border Payment Initiative (BCBPI), in which members of the organization will use their national currencies to trade.

BRICS will likewise establish an alternative messaging infrastructure to circumvent the SWIFT system of interbank communication, which is overseen by the United States and subject to Western unilateral sanctions.

There are also plans for the establishment of a BRICS Grain Exchange and associated pricing agency, with centers for trade in commodities like grain, oil, natural gas, and gold, which can likewise be used to settle trade imbalances.

These proposals were outlined in the report “Improvement of the International Monetary and Financial System”, which was co-authored by the Ministry of Finance of the Russian Federation, the Bank of Russia, and the consulting firm Yakov and Partners.

In February 2024, the finance ministers and central bank governors of BRICS met in Sao Paulo, Brazil. There, the Russian representatives said they would prepare a report “for BRICS countries’ leaders with a list of initiatives and recommendations on ways to improve the international monetary and financial system”.

Russia’s Finance Minister Anton Siluanov explained the motivation:

"The current system is based on existing Western financial infrastructure and the use of reserve currencies. It is severely flawed and is increasingly used as a tool of political and economic pressure. Another reason for a reform of the international monetary and financial system is the geo-economic fragmentation that became a result of the abuse of trade and financial restrictions."

The Russian BRICS chairmanship report argued that the international monetary and financial system (IMFS) is not only unjust but also inefficient, as it is a monopoly that suffers “from excessive reliance on a single currency and centralized financial infrastructure”.

The document noted that the “current IMFS is primarily serving interests of AEs” (advanced economies) – that is, largely the wealthy countries of the West.

As of 2023, the original five BRICS countries make up 32% of global GDP (measured at purchasing power parity, PPP), but have only 13.54% of voting shares in the IMF.

On the other hand, the G7 nations hold 41.27% of the voting shares in the IMF, despite the fact that they comprise just 30% of global GDP (PPP).

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[–] [email protected] 32 points 3 weeks ago (1 children)

Hope they're successful for the sake of countries like Cuba, but I imagine this will take a long time to set up and work out the kinks.

[–] [email protected] 14 points 3 weeks ago (3 children)

This would be an massive undertaking. I'd expect it to take decades before it starts getting any results.

[–] [email protected] 10 points 3 weeks ago (1 children)

I mean we can already see the results today with Russia and China doing all their trade outside the dollar, and China increasingly doing currency swaps with other countries now. The dollar based economy is already shrinking as a result, and on top of that the US no longer has visibility into trade that's happening globally the way they used it. For example, a lot of predictions of China's economy slowing down was based on reduced imports from western countries using SWIFT system, but now we know that China was simply redirecting its trade away from the west and towards the Global South.

[–] [email protected] 2 points 3 weeks ago (1 children)

It will certainly have some immediate effects, but the actual breaking down of dollar hegemony will definitely take upwards of a decade...which is still fast in terms of geopolitics time. Unfortunately for the global south, the effects that will accelerate their liberation will fall towards the later ends of this timeframe.

[–] [email protected] 4 points 3 weeks ago (1 children)

It's difficult to say how this plays out. It certainly could take up to a decade, but we may see a lot of rapid changes early on as well. With regards to the Global South I expect the effects are going to be fairly immediate because China is the country that's helping Global South develop and build out infrastructure. The west is becoming largely irrelevant to the global majority because it's not actually producing much of anything that people need.

[–] [email protected] 1 points 3 weeks ago (1 children)

With regards to the Global South I expect the effects are going to be fairly immediate because China is the country that's helping Global South develop and build out infrastructure

This is actually why I say those effects will take a while for the global south. Construction projects usually take years before their utility is realized. In the meantime, there is no alternative to the dollar for the global south. They cannot oppose unilateral sanctions yet, nor can they organize against US imperialism.

I've been pleasantly impressed by the rate of progression in recent years, but I'm not getting my hopes up for an early miracle. I'll pray for the collapse of the dollar, but my bet is on 10-20 years before the US cannot wield their economic posture as a weapon against most of the world.

[–] [email protected] 2 points 3 weeks ago

Construction projects require workers and stimulate the economy as a result, so the benefits appear even before they're completed. And there absolutely is an alternative to the dollar for the global south today because both Russia and China trade outside the dollar right now. The BRICS is offering a tangible bulwark against US imperialism and we can see the effects of that today. This is all happening as we speak.

[–] [email protected] 6 points 3 weeks ago* (last edited 3 weeks ago)

I dunno. Highly motivated, highly incentivized, backed by the most productive nations on the planet. I think those of us in the West are used to tranformative things taking forever because of the incompetence and the lack of incentives for the powers that be, and we forget how quickly our nations do transform things to harm us - DMCA, domestic surveillance, sharing intelligence, privatizing water, destroying habitats, etc.

[–] [email protected] 3 points 3 weeks ago

i hope it doesnt. a dollar crisis will wipe us the fuck out.

[–] [email protected] 7 points 3 weeks ago (1 children)

The protocol isn't even the issue, banks already use XRP.

It's the fact that USD is propped up by Uncle Sam's globalized monopoly which is kept in tip top shape by geopolitical power.

Everyone trades in USD because it's the de facto currency and it's stable because the government can abuse its power to keep it that way.

No one trusts the value of the Ruble, Yuan, Rupee, or even any other currency except for maybe the Euro. They all exist for internal use, which means its just gets compared in value to USD whenever you have to deal with anything external, which is all the time.

BRICS would only fly if a stable trade medium can rapidly prove its worth with market stress and trade requirement, otherwise everyone will just continue to use USD, hence why the USA doesn't currently view it as much of a threat. And even if you could get countries on board, the US can hold on to a massive noose around everyone's neck by refusing to trade in anything but USD, which would effectively shut you off from trading with a massive portion of US based/owned/partner companies.

[–] [email protected] 5 points 3 weeks ago

The rise of crypto and other limited quantity intermediaries shows that stable value step is far easier than it once was, and of course with China and Russia having ridiculous levels of precious metal wealth a worse case scenario would just be a literal gold standard currency for brics transactions.

While the US might throw a hissy fit about this (I mean they invaded Libya exclusively because Libya were launching a gold standard to trying to get non US oil trading to adopt it) they dont have the ability to say no. The US has no manufacturing sector compared to China or Russia, the former of which the US relies on massively for the majority of its domestic manufacturing needs. It also can't compete in the remote service economy compared to India, and again has outsourced a large chunk of that part of its economy there.

US sanctions only work if the country sanctioned provides nothing of value that can't be easily done domestically. There's a reason that China as a whole is not sanctioned despite doing things far worse than Cuba ever did.

Refusing to trade in USD would be the same as sanctions in this scenario, and I'm willing to bet brics has figured out that they have enough demand across their member nations to support not trading with the US.

[–] SuperSpruce 6 points 3 weeks ago

I hope this saves the world economy if the US defaults on its debt, which is looking increasingly likely in the coming decades...

[–] [email protected] 5 points 3 weeks ago

This should be fantastic for hackers, there's new target(s) beside SWIFT.
If Swift could still be hacked, this payment needs to really ramp up their security processes pretty quick before some hacker steals money from it

[–] [email protected] 2 points 3 weeks ago

This will take another 7 or 8 years to come to fruition.

[–] [email protected] -2 points 3 weeks ago (3 children)

I wonder what their actual goal is? Because actually posing a real, material threat to American economic hegemony results in your country experiencing regime change and people on forums a decade later arguing about whether you're dead or in hiding with Elvis and Tupac.

[–] [email protected] 17 points 3 weeks ago (1 children)

So you're saying usa empire will overthrow russia, china, brazil, and india?

I think it's more likely the USD will continue to decline in both value and usage.

[–] [email protected] 2 points 3 weeks ago

Isn't the first graph just general inflation? What does purchasing comparing purchasing power mean in this scenario? And how does it compare to other currencies like the pound or the euro?

Also the conclusion of the second article you linked seems to indicate that no other large scale currencies are replacing the shares of the US dollar, instead things like gold and diversified currencies are taking up this space, those don't take the place for international trade.

Neither of these seem like a death knell for USD to me.

[–] [email protected] 12 points 3 weeks ago (2 children)

While it's definitely true the US loves its war mongering, it's economy is dependent entirely on China and India. If they try to invade either country, it's game over for the US(and the world), and neither country is particularly vulnerable to the normal CIA methods. Falun gong in China, for example, is the CIA's best attempt at trying to sell America to the Chinese via homegrown terrorism, and they're so pathetically obvious it's doubtful anyone in China has ever fallen for their shit.

Capitalism removed the tools by which the US is a threat, allowing brics to be possible.

[–] [email protected] 7 points 3 weeks ago

That's true for small countries that US is able to dominate economically and militarily. That is not possible to do with countries like Russia, India, or China. This is what it means to live in a multipolar world. The US is no longer the top dog who can just go around doing whatever it wants.

[–] [email protected] -5 points 3 weeks ago (2 children)

It looks to be pushed by a few big countries who love to tamper with their monetary system which will be a big No No if they are part of the new system. This feels like a foot gun.

[–] [email protected] 6 points 3 weeks ago (1 children)

lmfao hard to think of a better example of a country tampering with its monetary system than the US printing trillions of dollars every few years 🤡

[–] [email protected] -1 points 3 weeks ago (1 children)

there is a difference from trying to stabilize an economy by controlling inflation and rates. We've seen China modifiy their currency maliciously. If China or Russia dont see favorable trade in their direction both would easily tank their economy to destroy other countries.

[–] [email protected] 4 points 3 weeks ago (1 children)

Oh do explain in what way China modifies their currency that's malicious. Also, hilarious amounts of projection happening there. Only fucked in the head westerners see everything as a zero sum game where they'd rather destroy the world than live with the fact that somebody out there is doing better than them.

[–] [email protected] -1 points 3 weeks ago (1 children)

In 2019 China repeatedly modified their currency and rates causing world banks to believe they were doing it intentionally to gain trade advantage over orher countries.

In 2015 and 2005 they also devaluated their currency causing surges in trade and nearly caused a currency war.

[–] [email protected] 4 points 3 weeks ago

Not sure what's malicious about China protecting their economy like everyone else.

[–] [email protected] 4 points 3 weeks ago (1 children)

Can you elaborate? What tampering do you mean, what benefits does it provide, and why would the be lost because of this move?

[–] [email protected] -1 points 3 weeks ago

China has intentionally printed and destroyed currency to maneuver themselves against other countries. It's one thing where you modify rates to influence inflation and spending but extreme manhandling your financial system means you are not a stable system to base the world economy on. While any country could screw everyone over, its the fact they have already manipulated things that makes them scary.