The BRICS Summit’s Exciting Revelation: Hinting at New BRICS currency and Financial Infrastructure?
This famous quote by David Hawkins seems to resonate with the situation that we can see at the BRICS summit these past 3 days.
“ We change the world not by what we say or do but as a consequence of what we have become”
As a consequence of Global domination by Western forces, the BRICS nations have come together to form an ecosystem for themselves and the most interesting piece of news has come in today.
The BRICS is unveiling the concept for its currency. Many analysts, economists and investor have argued about the BRICS currency and if it will come to fruition.
Well, on the third day of the summit something truly interesting has unfolded.
Let’s dive into this blog to understand if this is a path breaking concept in the world of currencies or is it something more.
BRICS unveils Symboli Banknote:
It’s no surprise that every BRICS summit to date has some or the other surprise waiting around the corner. The last summit left us in a year when power oil producing countries from the Middle east joined the BRICS. Now the announcement from Kazan leads the way to something more interesting.
At the summit in Kazan, a symbolic banknote featuring the flags of member nations was unveiled and this sparked discussion on creating alternatives to the US dollar and fostering a more independent economic system.
BRICS Moves Closer to a Gold-Backed Currency System
On Thursday, Russia’s Ministry of Finance made an official statement about a transformative step within BRICS: the creation of a metals trading mechanism within member nations. This shift, according to the Ministry, is geared towards “fair and equitable competition” grounded in transparent exchange principles, as reported by Oreanda.
Finance Minister Anton Siluanov elaborated, saying the mechanism will include new pricing instruments for metals, standard protocols for bullion production and trade, and comprehensive accreditation, clearing, and auditing within its framework. This initiative, he added, aims to make the BRICS Precious Metals Exchange a leading force in setting precious metals prices.
A Currency Pegged to Gold and More: The BRICS “Apolitical” Currency
Here’s where it gets even more interesting. Recently, Andy Schectman, President of Miles Franklin Precious Metals, gave some insight into BRICS’s currency ambitions. He highlighted that the organization is considering a currency pegged 40% to gold and 60% to a basket of BRICS national currencies. The aim is to create a stable, “apolitical” currency that doesn’t fall victim to sanctions or other geopolitical disruptions.
And it doesn’t stop there. Over the last few years, its members and other global central banks have increased their gold holdings while repatriating it from major vaults worldwide. Countries like Germany, Austria, Argentina, and the Netherlands are all securing their gold locally. This wave of repatriation points to an important shift — central banks are gearing up for a currency framework that relies on their own reserves rather than external assurances.
Schectman suggests that countries may even use their gold holdings to mint BRICS-backed tokens, a truly ground breaking possibility in the world of currency.
Putin’s Approach to “De-Dollarization” — It’s better to be Prepared!
At the Summit, President Vladimir Putin clarified that BRICS is not challenging the US dollar but is exploring alternatives. He recognized the dollar as an essential global finance tool but noted that its politicization has eroded trust. Putin emphasized that the organization’s strategy isn’t about undermining the dollar; rather, it’s about readiness. “If they block us, we’ll find alternatives,” he stated, highlighting the organization’s realistic approach.
He further goes on to say that by exploring alternative currencies for trade, BRICS seeks to mitigate the risks posed by such political measures. According to Putin, using the dollar as a weapon will accelerate the transition to new financial structures, hinting that the BRICS bloc is moving toward a “fairer economic system”
Local Currency Settlement Takes the Lead in BRICS Trade
BRICS nations have formally endorsed local currency settlements for cross-border trade. In the Kazan Declaration, they stated: “We welcome the use of local currencies in financial transactions between BRICS countries and their trading partners.” By using local currencies instead of the dollar, the organization can reduce dependency and strengthen trade ties.
India as always has been at the forefront of advocating change in the global scenario. Prime Minister Narendra Modi emphasized that this shift would strengthen economic ties among BRICS nations and provide a more resilient framework for trade. In recent times, India has already taken steps in this direction, allowing trade settlements in rupees with countries like Russia and the UAE and it continues discussions with others like Indonesia.
Final note:
While praise exists for the endorsement of local currencies by the BRICS, the road ahead is not without its own challenges. Putin has noted that the speed of transitions to a fairer economic system depends on abandoning “someone else’s rules and platforms.”
Our research team at Commodity Samachar Securities had something interesting to share about all these crucial events. It goes as follows:
“The recent Summit fuelled a rally in gold, but without any major resolutions on key financial matters, the excitement has simmered down, leading to some profit booking. BRICS countries are keeping their focus on their domestic currencies, so it looks like we’ll have to wait for the next summit to see any significant shifts.
As it stands, the overall trend in gold and silver remains positive, but in the short term, the outlook leans toward short-selling or profit-taking. Silver especially is looking volatile; if prices dip further, we could see more downside pressure in the coming weeks.”
While the symbolic BRICS banknote and discussions of a common currency may signal a desire for change, the immediate focus remains on enhancing local currency settlement and building the necessary financial infrastructure.
That’s all for today. We’ll be back with more interesting articles soon.
Until then, Happy trading!
Commodity Samachar Securities
We Decode the Language of the Markets
Click Here 👉Chat with Analyst
Also Read: Forex in Focus: Germany’s Business Morale Boost Sparks Hope
Recommended Read: Trader’s Guide: Could You Profit from 2024’s Silver and Gold Price Fluctuations?
