![]() Additionally, seven of the 13 OPEC countries have also joined or applied to join the BRICS, and all OPEC countries are connected in the BRI. The United States is noticeably excluded.ĭespite China–India relations alternating between détente and antagonism, both countries seem willing to cooperate to some extent, with India participating and investing in the BRI on a proxy basis through the Asian Infrastructure Investment Bank, New Development Bank and Shanghai Cooperation Organisation. This may well be China’s plan, given the extent of its Belt and Road Initiative (BRI) – the largest infrastructure development project in history aiming to connect Asia and Africa, Europe and South America. It’s conceivable to see BRICS nations entirely self-sufficient, trading among themselves without any reliance on the United States. This surpasses the G7’s (United States, Canada, France, Germany, Italy, Japan and the United Kingdom) GDP of 30.7 per cent. However, BRICS nations now account for more than 40 per cent of the world’s population and have an aggregated global GDP of 31.5 per cent. Countries are positioning themselves for a new international system.Īs the reliance on US dollars diminishes, central banks will begin dumping their dollar reserves.įor decades, the United States has been considered the global hegemon. Meanwhile, we see a declining share of US dollars held by central banks, according to the IMF Currency Composition of Official Foreign Exchange Reserves (COFER). It seems clear that BRICS countries are accumulating gold in preparation for their new currency (noting Türkiye, among many others, has applied for BRICS membership). According to the IMF World Gold Council, the first two months of this year saw the largest purchases of gold from Singapore (51.4 tonnes), Türkiye (45.5 tonnes), China (39.8 tonnes), Russia (31.1 tonnes) and India (2.8 tonnes). Indeed, central banks are already stockpiling gold reserves. It is speculated that the BRICS currency will be backed by gold – this would be a historic return of the gold standard and bring stability to the new currency. This will again be on the agenda for the 15th annual BRICS summit this month. This month, the BRICS nations will meet to discuss, among other matters, a new currency that will rival the US dollar as the global reserve standard (Wu Hong/AFP via Getty Images)ĭuring the 2022 BRICS summit, Russian President Vladimir Putin announced that the bloc was working to create an “international reserve currency”. The signals of de-dollarisation were emerging. Moreover, at this year’s World Economic Forum in Davos, Saudi Arabia’s Finance Minister Mohammed Al-Jadaan announced that the country was open to trading in other currencies in addition to the US dollar – something they haven’t done in nearly 50 years. The United States was no longer the sole protector of the Saudi Kingdom. In 2021, Saudi Arabia and Russia signed a military cooperation agreement. However, the dollar dominance may be coming to an end. This created synthetic demand – countries buying oil would need US dollars – which in turn enabled US dollar primacy. The United States agreed to provide military support and, in return, the Organisation of the Petroleum Exporting Countries (OPEC) would denominate oil globally in US dollars. A few years later, US Secretary of State Henry Kissinger visited King Faisal of Saudi Arabia to broker the petrodollar system. However, in 1971 the dollar was decoupled due to insufficient US gold reserves rendering the dollar fiat money. ![]() It was pegged against gold at an exchangeable rate of $35 an ounce. During the 2022 BRICS summit, Russian President Vladimir Putin announced that the bloc was working to create an “international reserve currency”.įollowing the end of the Second World War, the Allies gathered at Bretton Woods and anointed the US dollar as the world’s principal reserve currency.
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