BRICS’ new currency will launch a global REVALUATION and challenge RESET the financial system once and for all.
The fiat currency financial landscape stands on the edge of a major shift with the potential for a significant revaluation (RV) and a global currency reset (GCR).
This transformative change is closely tied to the ongoing initiative by the BRICS Alliance to introduce a new gold-backed common trade currency.
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The BRICS bloc is increasingly seeking to reduce its reliance on Western G7 currencies, particularly the US dollar, for international trade. The quest for economic sovereignty and financial stability drives these nations to consider a common trade currency.
A significant revaluation of currencies will be a key result of this initiative, profoundly impacting the global financial system.
In This Article
- Reducing Reliance on G7 Currencies
- The Inadequacy of Existing BRICS Currencies
- The Need for a Globally Acceptable Currency
- Integration into the Forex Market
- Benefits of Gold Backing
Reducing Reliance on G7 Currencies
The dominance of the US dollar and the euro in international trade presents significant challenges for BRICS nations.
Dependence on these currencies exposes BRICS economies to the monetary policies and economic fluctuations of Western nations. This dependence often results in economic instability, as decisions made by the Federal Reserve or the European Central Bank can have far-reaching, negative effects on BRICS economies.
For instance, interest rate hikes in the US can lead to capital outflows from BRICS nations, causing currency devaluations and economic turmoil.
A common trade currency would mitigate these vulnerabilities, providing BRICS members with greater control over their economic destinies and reducing the influence of G7 monetary policies on their economies.
The Inadequacy of Existing BRICS Currencies
None of the individual BRICS currencies—the Chinese yuan, Russian ruble, Indian rupee, Brazilian real, or South African rand—have the global acceptance or liquidity of the US dollar or euro. Each of these currencies has its own set of challenges, including limited international use, lower levels of liquidity, and susceptibility to domestic economic issues.
Relying solely on a basket of these currencies would not solve the problem, as these currencies lack the widespread use and trust needed for efficient international trade.
Additionally, the volatility and varying economic policies of the BRICS nations can lead to instability in the value of these currencies, making them less reliable for international transactions.
The Need for a Globally Acceptable Currency
For BRICS to enhance trade efficiency and efficacy, a new, globally acceptable currency is essential.
This common trade currency (CTC) would be used by all BRICS members for trade among themselves and potentially accepted by many non-BRICS countries, promoting smoother and more reliable cross-border transactions. The CTC would serve as a stable and reliable medium of exchange, reducing transaction costs and exchange rate risks associated with using multiple currencies.
This stability would encourage more countries to engage in trade with BRICS nations, fostering economic growth and cooperation.
Establishing a New Central Bank and Clearing House
To manage the new currency, BRICS would need to establish a central bank facility dedicated to the CTC. This institution would oversee the issuance and regulation of the currency, ensuring its stability and trustworthiness.
The central bank would implement monetary policies to maintain the value of the CTC and manage its reserves of gold and BRICS currencies.
Additionally, a central clearing house similar to the Bank for International Settlements (BIS) would be necessary to facilitate efficient and secure transactions. This clearing house would act as a financial intermediary, ensuring that cross-border transactions are settled smoothly and reducing the risk of fraud and financial mismanagement.
The Structure of the Common Trade Currency
To ensure high fungibility and acceptance, the proposed CTC would be backed by 40% gold and a basket of major BRICS member currencies. This backing would lend stability and credibility to the CTC, making it an attractive option for international trade partners.
Gold, a universally recognized store of value, would enhance the currency’s stability, while the inclusion of BRICS currencies would reflect the economic strengths of the member nations.
The 40% gold backing would provide a solid foundation for the CTC, reducing the risk of inflation and currency devaluation.
The remaining 60% would be backed by a diversified basket of BRICS currencies, ensuring that the CTC reflects the collective economic power of the member nations.
Attracting Non-Member Nations
The gold-backed CTC would appeal to many countries outside the BRICS bloc, except for G7 nations like the US, EU, England, and Canada, which may resist such a shift.
The stability and value offered by gold backing would make the CTC an attractive medium for trade, enhancing its acceptance and use worldwide.
Non-member nations, particularly those in developing regions, would find the CTC to be a reliable alternative to the volatile G7 currencies, fostering economic ties with BRICS nations and reducing their reliance on Western financial systems.
Integration into Forex Markets
The CTC would soon find its way into the Forex market, further solidifying its acceptance and convertibility.
As a stable and reliable currency, it would offer an alternative to the volatile and inflation-prone fiat currencies of the G7 nations.
The integration of the CTC into Forex markets would provide traders and investors with a new instrument for hedging and investment, increasing its liquidity and global acceptance.
Over time, the CTC would become a significant player in the global currency market, challenging the dominance of the US dollar and euro.
Benefits of Gold Backing
Backing the CTC with gold would provide significant advantages.
Gold is a stable store of value, which would reduce inflation and offer superior stability compared to major G7 fiat currencies. The gold backing would make the CTC a reliable hedge against economic uncertainty, attracting international confidence and FDI (Foreign Direct Investment).
Historically, gold has been seen as a safe haven asset during times of economic turmoil. By backing the CTC with gold, BRICS nations can ensure that their currency remains stable and retains its value even during global financial crises.
Stronger BRICS Member Currencies Drives the RV/GCR
A crucial benefit of the Common Trade Currency (CTC) is the significant revaluation (RV) and global currency reset (GCR) it would trigger for BRICS member currencies.
By linking their currencies to a gold-backed CTC, BRICS nations would experience a substantial appreciation (RV) in their exchange rates against G7 fiat currencies.
This revaluation would be driven by the intrinsic value and stability provided by the gold backing, enhancing the global standing of BRICS currencies.
The RV and GCR process would logically unfold as follows:
- Gold-Backed Stability: The gold component would provide a stable foundation, reducing inflation and increasing confidence in BRICS currencies. Investors and global markets would recognize the inherent value of a currency backed by a tangible asset like gold.
- Increased Demand: As the CTC gains acceptance in international trade, demand for BRICS currencies would rise. This increased demand would naturally lead to an appreciation of their values.
- Market Adjustments: Forex markets would adjust to the new reality of a stable, gold-backed currency. Traders and investors would shift their portfolios to include more BRICS currencies, further driving up their values.
- Global Acceptance: The widespread acceptance of the CTC would reduce the dominance of the US dollar and euro. As more countries and businesses start using the CTC, the reliance on G7 currencies would diminish, causing a shift in global currency dynamics.
- Economic Benefits: The strengthened exchange rates would lead to lower import costs for BRICS nations. This reduction in costs would increase the purchasing power of BRICS citizens and businesses, fostering economic growth and development.
- Long-Term Stability: The consistent value provided by the gold backing would ensure long-term stability for BRICS currencies. This stability would attract further investment and trade, reinforcing the positive cycle of currency revaluation and economic growth.
Overall, the introduction of a gold-backed CTC would not only stabilize and strengthen BRICS currencies but also initiate a broader RV and GCR across the global financial system against all purely fiat currencies.
ALSO READ: BRICS Now Dominates Global Oil, Gold and Energy Supplies
This strategic move would reduce dependence on G7 fiat currencies, enhance the economic sovereignty of BRICS nations, and contribute to a more balanced and multipolar global economy.
The Bottom Line
Introducing a common trade currency backed by 40% gold and a basket of BRICS member currencies is a strategic move that could transform international trade for BRICS nations. It would provide economic stability, reduce reliance on G7 currencies, and enhance the global standing of BRICS economies.
The creation of this new currency, supported by robust financial institutions, would mark a significant step towards a more balanced and multipolar global financial system.
The resulting RV of BRICS currencies would have far-reaching implications, including the rapid adoption of gold-backed currencies and the hyperinflation of any remaining fiat currencies – a planet wide GCR.
