And the split continues.
Edit: Lol, there’s mention of it being based on blockchain. Of course, why not use a technology that already doesn’t work well. I wonder if they’re going to go with a Western firm to implement it.
Here’s where it falls apart, right here:
[Vladimir Putin] also said the increased use of BRICS national currencies for transactions will “minimize geopolitical risks.”
Some of the BRICS countries have wildly volatile currencies either because of governments “printing money” to devalue their currency for economic stimulus for exports or to pay down debts. Alternatively straight up currency manipulation by the sovereign states issuing them. I would think this makes settling transactions in these local currencies a big risk for commerce. You don’t know if the value of the currency you accept tomorrow will be worth what it is today. These are reasons GBP, Euro, and USD are so valuable as currencies, they generally have pretty consistent values.
Some of the BRICS countries have wildly volatile currencies
https://cdn.howmuch.net/articles/Rise-and-Fall-of-the-USD-688d.jpg
Feel free to post the alternate currency that was more stable for the history you’re showing. I’d wait, but I’d die waiting.
I suspect they’re- Russia- trying to pull a fast one, and china is okay because it won’t hurt them.
Maybe this gives Russians access to reserve currencies that are harder than the ruble.
China is ok with it because they will insist the Renminbi be used as the brics reserve currency.
I mean Russia is back to bartering for goods the Ruble is struggling so hard.
I imagine the the reason China is ok with it is cause they view Russia as collateral that they can claim for their cheap labor force and supplies when they try to push their own economy out of so much manufacturing.
Similar to what they are doing in Africa but with a closer contract to push on since it’s closer and easier to control.
How will this be any worse on BRICS Clear than it currently is on Swift ?
How will this be any worse on BRICS Clear than it currently is on Swift ?
Lets say you’re Egypt selling cotton to Russia. BRICS Clear is pushing local currencies. So Russia wants to pay for the Egyptian cotton in Russian Rubles. Lets say the amount of Rubles would buy 10,000 barrels of crude oil at the time of settlement. Russia is currently in economic dire straights and the currency value is dropping. When Egypt wants to spend its Rubles, if it can find a country willing to take them, it could only buy 5,000 barrels of crude oil.
How eager will Egypt be to settle another transaction in BRICS Clear when the value can evaporate. This is way international trade wants to settle in stable currencies.
All local currencies? Yeah, that would hamstring it a bit. I was kind of assuming it would be primarily RMB.
Edit: Skimming the declaration, they emphasised local currencies a lot. It’s very light on details as to how, though, so basically I’ll believe an n-currency international market when I see it.
Right, but there ways to mitigate that, without relying on the dollar and although they are not insignificant, they’ve surely considered them - the political benefits are huge for them.
there ways to mitigate that, without relying on the dollar and although they are not insignificant,
Sure, you can rely on other stable currencies like Euros or GBP. Alternatively you can rely on gold, but if you have the ability to trade your own currency to someone willing to accept it and give you sufficient gold, and that you can produce that gold on demand to buyers, you don’t really need a fiat currency except to facilitate transactions easier. The problem is these countries aren’t backing their currency with gold (or other precious metals).
The tradeoff to gold backing is that you can’t grow your economy either. The amount of currency in circulation will always be limited by the ratio of gold you’re backing your currency with. This is why the USA abandoned the gold standard, and it was the right decisions. Before doing this, if you wanted to borrow money, you had to FIND someone with money that would be willing to lend it. There were instances of limits in growth simply because all the folks that held the vast majority of the wealth (and thereby gold backed currency) weren’t lending it, so loans couldn’t occur in volume.
China would love for RMB to become a default reserve currency. There are strong accusations that China is a currency manipulator though. I’m not educated enough on the topic to have an opinion on it. However, countries choosing it as a reserve currency may be left holding the bag.
Awesome info thank you
Didn’t the Euro even start as being pegged to the dollar at 1:1 to stabilize it in the beginning? Or am I misremembering?
No, not the euro, but China did peg the Yuan to the dollar for years to ensure their exports remained cheap.
How is this even going to work? The rest of the world will still go with the dollar.
Probably, but they’ll be a bit less locked into it. (As I understand the situation, pre-article-reading)
Why would anyone assume that? The world is increasingly not going with the dollar.
“Increasingly” is doing a lot of heavy lifting. A chart from your own article:
Voice of America - News Source Context (Click to view Full Report)
Information for Voice of America:
MBFC: Least Biased - Credibility: High - Factual Reporting: High - United States of America
Wikipedia about this sourceSearch topics on Ground.News
https://www.voanews.com/a/china-backs-russia-proposed-brics-payment-system-/7836865.html
Woohoo! I love this, the assholes are building their own wall around themselves and paying for it!
Good for them for breaking North American hegemony.
🇷🇺 🇨🇳 🙇♂️
Reminder that countries in the third world hate each other, for the most part. Even here, China basically just sees Russia as potentially useful.
The only thing they’ve broken is their own economic growth. Alarms are going off in China particularly. Hard to make a recovery plan when government also controls the industry. Their last round of stimulus did absolutely nothing.
Not to mention, the other half is that they wouldn’t even be discussing this if Russia wasn’t being slowly economically strangled due to sanctions. And Russia wouldn’t be getting sanctioned if the hadn’t fucking invaded Ukraine proper in 2022.
Without the dollar, no economic growth
Sounds like a monopoly to me.
I don‘t support monopolies.
Feel free to give me any of the dollars or dollar-backed currencies in your possession since you don’t support them. I’ll be happy to take them off your hands. I won’t even ask for a chicken or goat in trade.
I‘m so thankful that there are people like you on Lemmy who get it!
Faith restored!
You either support what you consider to be a monopoly, the U.S. dollar, or you don’t.
If you don’t, you should clear your conscience by getting rid of it all. I’m just trying to help. You don’t want to be hypocritical, do you?
Well you’re not going to replace it with a less trusted method. Ask any company that ran into China in the 90s whether they would do it again. I guarantee their version of this will be more restrictive and offer 0 protections for the businesses that use it. They all know the Chinese government just seizes whatever they want whenever they want it.
Well I wouldn’t turn to Russia for economic growth. That’s for sure.
You are a charming lad, aren’t ya? Into the Shadow Realm you go.
That‘s me.
I am critical of Russia and United States of North America.
Sue me, right?
They already blocked you to keep their echo chamber pure.
Cause if you can’t see people that disagree with you they don’t exist and you can be surprised and angry when things just don’t go your way.
I always say that Russia is committing war crimes so your point sir ?
I am just criticizing how international law is selective.
