Inflation data from Europe and the U.S. have risen substantially over the past month. However, Russia and the BRICS members revealed that leaders of five major emerging economies were in the process of “creating an internationally reserve currency.” The BRICS reserve currency will rival the U.S. Dollar and International Monetary Fund’s Special Drawing Rights (SDRs).
The West has been experiencing high inflation and higher energy prices over the past month. The U.K., Europe and the U.S. politicians have tried to put the economic crisis on many things, including the Ukraine-Russia war, Covid-19, and other factors.
Last month’s consumer prices in America have reached all-time highs. Many analysts believe that Western countries are either in recession or about to enter one . BRICS members met in June at the 14th BRICS Summit. They discussed global affairs.
These are the five leaders of the BRICS countries from China, Russia Brazil, India, South Africa.
During the BRICS Summit Russian President Vladimir Putin declared that five member economies — Brazil and India, China, South Africa, and China — plan to issue a new global reserve currency.
Putin stated that the matter of creating an international reserve currency based upon a basket of currencies from our countries was under review. He added that “We are openly willing to work with all fair parties.” Turkey, Egypt, Saudi Arabia, and others are interested in joining BRICS. Analysts believe that the BRICS’s attempt to create a reserve currency was an attempt to undermine both the U.S. dollar (and the IMF’s SDRs).
Vladimir Putin, the Russian president, announced that a new international currency was being developed by BRICS at this year’s BRICS Summit.
“This is a move in order to address the perceived U.S. hegemony over the IMF,” Chris Turner, , global head of markets, ING, explained at June’s end. It will allow the BRICS to create their own spheres of influence and currency units within that sphere.
Although the creation of a reserve currency by BRICS may seem surprising to some, specific accounts regarding the members that are countering the U.S. dollars have been reported for quite some time. Global Times reported that members were asked to stop relying on the dollar’s global dominance at the end of May 2022.
Russian Business Relations and BRICS countries intensify — China’s President Xi Jinping says that countries who ‘Obsess with a Position Of Strength’ and /or ‘Seek their Own Security at The Expense Others’ will fall
Putin stated that the “contacts between Russian business circles, the business community in the BRICS countries has intensified” the Russian president added that Indian retail chains would be located in Russia and that Chinese cars and hardware would also be imported frequently. Putin’s comments and statements at the BRICS Summit have led people to believe that the BRICS members don’t just ” talk shop anymore.”
Russia has also increased its foreign aid, and delivered weapons to Sub-Saharan African nations. In specific statements made by media, Putin and other BRICS leaders are pointing out the U.S. hegemony as well as its exceptionalism.
Putin has repeatedly condemned and criticized the U.S. for financial sanctions at various times throughout the years.
Putin spoke to the crowd at the St. Petersburg International Economic Forum with a 70-minute speech. He talked about how the U.S. has dominated the global financial system for many years. Putin stated that “Nothing lasts forever.” “Americans consider themselves to be exceptional. The Russian president stated that Americans believe they are exceptional and that everyone else is second-class.
In a biennial speech, Putin spoke with Russian ambassadors and said that the West was losing a lot of its economic power. Putin stated that domestic socio-economic problems have worsened in industrialized nations as a result the (economical) crisis. “Be prepared for any development in the situation, even the most adverse.”
Russia and Putin both claim that America’s dominance in finance is waning for many years. Putin stated that the U.S. would sanction specific countries, including Russia, in October 2018 at the Valdai forum. This would weaken trust in the U.S. Dollar.
Russian President noted that many of the fallen empires made the same mistake. It’s a common mistake of an empire,” declared the Russian leader at the time. An empire believes it can make small mistakes and incur extra costs because its power doesn’t mean anything. Putin said that the number of these costs, and those errors, inevitably increases.”
The moment arrives when it cannot handle them in either the security or economic spheres.
Bloomberg also published a June report on the BRICS Summit. It noted that China’s president Xi Jinping claimed NATO was responsible for antagonizing Russia Federation. Xi said that countries that support exceptionalism will suffer from security vulnerabilities.
“Politicizing or instrumentalizing the world’s economy to wantonly impose sanctions will only hurt oneself as well as others,” Xi stated. “Those who seek security at the expense and expense of others, obsess over a position in strength, increase their military alliance, or seek their own security will only fall into a security trap.”
The Financial World Splits in Two: Alternative Payment Rails and Stockpiling Gold. And the Clash of a Robust Dollar or Ruble.
Since before the conflict in Ukraine, the BRICS countries have been strengthening. In 2014, Russia developed the System for Transfer of Financial Messages ( SPFS) and then the Mir payment method. In response to the annexed Crimea, Russia began to stockpile large amounts of gold that same year.
Along with the Mir payment system and CIPS, financial messages using SPFS have grown tremendously over the years.
China has also been hoarding huge amounts of gold, as both countries increased their gold reserves significantly in the years prior to war. The China International Payments System (CIPS), which is a system that allows for trade between Russia and China, was also signed by Russian banks. According to a report by Reuters, China opened its borders in April to gold imports worth billions of dollars.
Over the past few years, both Russia and China have been hoarding gold.
The U.S. dollar has been the global reserve currency since World War I. America was the world’s largest creditor. Today, the dollar is strong against a variety of currencies and is now the strongest currency in a generation. The U.S. The dollar currency index (DXY), which measures the value of dollars in US currency, grew more than 10% this year and outpaced stronger currencies like the Japanese Yuan.
The euro has recently reached parity with the US dollar. However, and many other currencies such as the Indian rupee and Polish zloty, South African rand, and the Colombian peso have struggled against the greenback in recent years. The Russian ruble, however, has been an strong competitor for the dollar this year and was one of the most-performing fiat currencies by 2022.
KamakshyaTrivedi, co-head of a market analysis group at Goldman Sachs, stated that the current situation is “pretty difficult to manage” with inflation rising and interest rates being raised by Federal Reserve. The analyst at Goldman Sachs believes that the dollar will be strong, despite the uncertainty. Trivedi noted that the most recent increase in the greenback’s value is relative to its past spike.
Trivedi, who wrote July 16 that “for now, we still expect to see the dollar trade on the front foot.” “There may be some more to go, but the biggest part of the dollar movement may be behind us.”