De-Dollarization: Is BRICS a Viable Alternative to the U.S. Dominated World Economic System?

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De-Dollarization: Is BRICS a Viable Alternative to the U.S. Dominated World Economic System?

Interview with Asam Ismi of the Canadian Centre for Policy Alternatives

By Asad Ismi and Peter Koenig
Global Research,
Canadian Centre for Policy Alternatives Monitor

Economist and Geopolitical analyst Peter Koenig talks to Asad Ismi

1. Is BRICS (Brazil, Russia, China, India and South Africa) a viable alternative to the present U.S.-dominated world economic system and does it have the potential to replace it? Are we witnessing the birth of a new international economic order in BRICS and the Russia-China energy deal?

The BRICS have a great potential to become a viable alternative to the dollar dominated economic system. The creation of the BRICS development bank is an indication in this direction. The bank could temporarily even act as a BRICS Central Bank and when the time comes issue a new BRICS currency, for example the Bricso. Together the BRICS account for almost 30% of world GDP and for about 45% of the world population. However, the US is using any means they can to destabilize the BRICS one by one. Take Brazil, though Dilma Rousseff has won easily the first round of elections, but after Washington’s slandering her government for corruption and high indebtedness – the usual non-substantiated arguments – her campaign had to work hard until reason prevailed. I’m confident, people’s trust will confirm her in the second round.

There is a massive effort of de-dollarization going on by the BRICS, led by Russia and China, the two strongest BRICS members. Since June 2014 regular and sizable ruble – yuan swaps have taken place to free the two countries from the traditional trading currency, the US dollar. In early July this year, after meeting with Vladimir Putin, Elvira Nabiullina, Governor of the Russian Central Bank, declared in an international media event, just before her impending meeting with the Governor of the Central Bank of China in Beijing, “We are discussing with China and our BRICS partners the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system]“, – thus announcing the emergence of an international anti-dollar alliance.

This signals the beginning of a new monetary system which eventually will issue its own currency, possibly a basket of currency, akin to the Special Drawing Rights (SDR) of the IMF that could gradually replace the dollar as a reserve currency. This is in fact already happening. Ten years ago, the world’s reserves consisted to about 90% of dollar denominated securities. Today that figure has shrunk to 60%.

Indeed it is high time that a new monetary and economic system replaces the current FED-BIS (Bank for International Settlement)-Wall Street dollar denominated predatory casino scheme that has in the last 100 years alone largely contributed to – and benefitted from – two world wars, impoverished our planet, socially and environmentally. This system is at the verge of a larger abyss than the depression of the 1930s.

The global amount of outstanding derivatives is estimated way above 700 trillion dollars – global GDP is about US$ 72.6 trillion (est. 2014). Five of the largest US banks alone have each more than 40 trillion in derivative exposure. If they decide to call in their debt at one or in part, it would for sure create a worldwide tsunami with a resulting collapse of our western monetary system. Today 6 US banks control two thirds of all banking assets (in 2008 the figure was just over 40%).

Add to this calamity that in 2008 the too-big-to-fail banks were ‘bailed out’ by public money, according to the new Todd-Frank banking Act, future insolvent banks have to rescue themselves by ‘bail-ins’ – confiscating money from depositors and shareholders. A similar law has recently been approved by the European Commission (EC). – The world at large can only hope that a new monetary system will emerge soon to reign in the atrocities of our western greed economy.

2. How will the BRICS system be better for the Global South than the U.S. one?

A “BRICS system” would offer a healthy alternative to the highly indebted and defunct dollar system, where money is printed at will. It would be detached from the Wall Street – BIS clearing system (SWIFT) and would allow trading in countries’ own moneys with currency swap arrangements between respective central banks. Today, though steadily declining, most trading is still denominated in dollars and has to transit through a US bank and the BIS clearing system. Under the FED-BIS-WS banking system currencies – and gold – are subject to exchange rate and interest manipulations…..MORE HERE

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De-Dollarization: Is BRICS a Viable Alternative to the U.S. Dominated World Economic System?