Thursday, 28 January 2016

Global Economic Collapse in 2016 ?? BRICS nations cut out US dollar.

Goodbye dollar? BRICS set to enhance trade in national currencies

28 February 2015 DADAN UPADHYAY for RIR
Edited by Bronwyn Llewellyn. Jan 29, 2016

BRICS nations are promoting mutual trade in their national currencies, a trend that could reduce the dominance of the US dollar in global trade.

Full article here on "Russia & India Report"
Both India and Russia are of the view that transactions in national currencies would be mutually beneficial for their national economic cooperation. Source: Alamy / Legion Media

The BRICS (Brazil, Russia, India, China and South Africa) group is actively engaged in speeding up the process of increasing their mutual trade in national currencies. 
The process  kicked off last July (2014) at the 6th BRICS Summit in Fortaleza (Brazil). BRICS leaders signed an agreement to establish the BRICS New Development Bank (NDB) with a reserve currency pool of over $100 billion. The NDB will help mitigate the effects of a dominant US dollar for trade between BRICS member nations. 
The US dollar is currently used for global trading with domination of the dollar-backed IMF, World Bank and Bank of International Settlements (BIS) headquartered in Basel, Switzerland.
A move for BRICS nations (133 nations affiliated in July 2014) to use their own national currencies in trade and investment means trading partners will not have to hedge against two different currencies. 
Currently, Indo-Russian trade exchanges rupee to US dollar then exchanges US dollar to rouble. If the US dollar is cut out, transactions costs are lower and mutual trade becomes more competitive.
In March 2013, BRICS nations signed two agreements allowing national currencies of member nations to be used in mutual trade and investments. The total trade between BRICS nations is $6.14 trillion which is around 17% of the world’s total trade.
Global trade is currently dominated by the US dollar. The impact for developing countries is that volatility of a particular currency in the currency market can cause huge economic and trade losses. The BRICS transition to trade in local currencies will protect them from such adverse fluctuations.


Russia’s Central Bank, BRICS discuss creation of global bonds. January 27, 2016. TASS 

Withdraw your MIND from the Money System. January 30, 2016


“Both India and Russia are of the view that transactions in national currencies would be mutually beneficial for our national economic cooperation. Our two Central Banks are working on modalities and are expected to make concrete recommendations to our governments shortly.”

- India’s ambassador to Moscow P.S. Raghavan to RIA Novosti news agency. February 18, 2014.

India and Russia have set up a joint working group to work out an “appropriate mechanism” for rupee-rouble trade. The group includes representatives from the central banks, export-import banks, commercial banks and the governments of both countries. They have had a number of meetings since last October (2014) to discuss this.
The trade turnover between the two countries is expected to greatly increase after this mechanism is put in place. The US dollar-dominated trade between Russia and India stood at $11 billion in 2014.
Indo-Russian trade based on rupee-rouble transactions was over $5 billion in 1991. Until the collapse of the Soviet Union, India was the biggest trading partner of the former Soviet Union.
Russian President Vladimir Putin said in December 2014 in New Delhi that the question of a transition to national currencies was very relevant:
“This will be mutually beneficial for the two countries, especially in view of the start of deliveries of liquefied natural gas from Russia to India from 2017,” he said.

Russia is well ahead in planning a transition to making trade settlements in rouble and yuan. 
“In the long-term, of course, settlements in rouble and yuan are very promising,” Putin said at the Asia-Pacific Economic Cooperation (APEC) summit, in November in Beijing. 
After his statement, Russia’s largest bank Sberbank began financing letters of credit in Chinese yuan and performed the first transactions in yuan with one of Russia’s largest companies. The two countries aim for a broader use of the yuan and the rouble in mutual settlements in different industries, including defence, telecoms, energy, and mining.
Director and Chief Executive at the National Institute of Public Finance and Policy in New Delhi, Rathin Roy said that the BRICS countries were keenly interested in reducing the use of the dollar. He stressed that Russia and China were already settling trading accounts in their national currencies - They have already established a mechanism to settle their mutual trading in rouble and yuan. In this respect, Russia and China have moved beyond all of the BRICS countries.
In March 2014, Brazil signed a deal with China to trade in their own currencies. Likewise, South Africa has been entering into bilateral agreements with other BRICS member nations as a step towards ditcing the US dollar.

Article:  BRICS, Shanghai Cooperation Organization, Eurasian Economic Union to cooperate for people’s welfare. July 10, 2015

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