Brics Countries, at Upcoming Summit in Russia, Will Weigh the Potential of a Gold-Backed Currency

Russia, during the upcoming Brics summit at Kazan, is expected to push for a new international payment platform that it hopes would rival the current system of fiat money — and gold could be a crucial component of the new regime. The coalition of developing countries — which recently expanded to include Egypt, Iran, and the United Arab Emirates, who have joined the likes of Russia, India, China, Brazil and others — will convene in Russia on October 22. During the two day meeting, the Kremlin plans to propose a new payment system to facilitate cross-country transactions that would allow countries to bypass Western sanctions, according to a document prepared by Russia’s finance ministry ahead of the conference and distributed to Reuters. Russia, which was hit with sanctions by Western countries in retaliation for its invasion of Ukraine in 2022, has a vested interest in undermining the dollar system which currently accounts for about 90 percent of all global dealings. Other Brics countries, with China as a notable example, face similar trade restrictions. The 10 countries belonging to Brics make up nearly half of the world’s population, one quarter of global GDP, and about 40 percent of global crude oil production and imports. The head of the task force on financial services of the Brics Business Council, Andrey Mikhailishin, claimed the new financial system will be designed with a focus on decentralization and the use of digital technologies, the Russian news agency, Tass, which is state-owned, reported. Mr. Mikhailishin told Tass that his group is preparing various solutions to present at the summit and that a “list of projects has been determined” for creating an “inclusive international financial system.” Among those projects are a “common unit of account;” a “platform for international settlements in BRICS digital currencies,” known as Bridge; a “payment system;” a “settlement depository,” called Clear; an insurance system; and what is being described as a Brics “rating alliance.” The currency project, Mr. Mikhailishin told Tass, includes the creation of a common unit of account that is pegged 40 percent to gold and 60 percent to a basket of Brics national currencies. The approach, he claims, allows for a “convenient and universal instrument.” Such a currency, Nasdaq reckons, has the potential to weaken the power of American sanctions and “challenge the US dollar’s dominance as the primary reserve currency.” Brics countries have already begun diversifying their reserves out of American treasuries in favor of gold, which they have been hoarding at rates faster than the rest of the world since 2018. By the second fiscal quarter of 2024, the gold reserves of Brics countries accounted for more than 20 percent of the gold supply held by central banks. Meanwhile, the share of dollars making up global reserves has thus dropped by 14 percent since 2002, when dollars accounted for 72 percent of global reserves. In 2024, that number stands at 58 percent. The dollar, for its part, has shed 99 percent of its value in gold since the collapse of the Bretton Woods agreement in 1971, bringing the greenback’s current value to little more than a 2,700th of an ounce of gold. The timeline for rolling out the Brics financial platform, however, remains unclear. The founder of the BRICS+ Analytics think tank, Yaroslav Lissovolik, told Reuters that the creation of such a system was technically feasible but would take time. “After the significant expansion of BRICS membership last year, the attainment of consensus is arguably harder,” he added. Even once the currency is established, its ability to dethrone the dollar would rest on a number of factors. “Ultimately,” Nasdaq writes, such a currency’s impact on the American dollar “will depend on its adoption, its perceived stability and the extent to which it can offer a viable alternative to the dollar’s longstanding hegemony.”

Brics Countries, at Upcoming Summit in Russia, Will Weigh the Potential of a Gold-Backed Currency

Brics Countries, at Upcoming Summit in Russia, Will Weigh the Potential of a Gold-Backed Currency

More from the New York Sun

America, Canada Enter Into Punishing Trade War After Last-Minute Breakdown of Talks

The Ballroom Standing

Massachusetts High Court Blocks Town From Installing Saints Statues Outside New Public Safety Center

The New School’s Jewish Students Start Returning to a Campus That Tried To Force Them Out

As Popularity of Digital Payments Rise, Advocates Fight To Preserve Cash Payment Options

Florida’s Primary Results Echo Far-Left Takeover of Democratic Party in McGovern Era

A Weeping Mother Says Migrants Will ‘Devour’ Her Daughter. What’s Really Happening in Ceuta?

Today’s Helicopter Parents Are No Longer Expecting Competence

More from the New York Sun

America, Canada Enter Into Punishing Trade War After Last-Minute Breakdown of Talks

The Ballroom Standing

Massachusetts High Court Blocks Town From Installing Saints Statues Outside New Public Safety Center

The New School’s Jewish Students Start Returning to a Campus That Tried To Force Them Out

As Popularity of Digital Payments Rise, Advocates Fight To Preserve Cash Payment Options

Florida’s Primary Results Echo Far-Left Takeover of Democratic Party in McGovern Era

A Weeping Mother Says Migrants Will ‘Devour’ Her Daughter. What’s Really Happening in Ceuta?

Today’s Helicopter Parents Are No Longer Expecting Competence