The Future of the BRICS Alliance and US Dollar
Introduction
- Significant collaboration forming between America’s ally and Russia
- Major implications for US dollar and global economy
- Focus on BRICS alliance developments and de-dollarization trends
India and Russia's Enhanced Bilateral Trade
- India’s PM Modi met with Putin in Moscow
- 2022: Bilateral trade at $65 billion, up 33% from the previous year
- India is now the top purchaser of Russian oil (1,000% increase since Ukraine invasion)
- Over 16,000 sanctions on Russia have found loopholes via BRICS collaborations
New Payment Systems and De-dollarization
- India and Russia to implement a new cross-border payment system
- Eliminates need for US dollars in transactions
- Goal: $100 billion trade revenue by 2030
- Significant for the BRICS alliance and future international trade models
Role of Gold and BRICS Members
- Rise in gold holdings among BRICS members since 2018
- One-third of all central banks plan to increase gold reserves in 2024
- US sanctions on Russia have inadvertently driven countries towards gold and away from the US dollar
Upcoming BRICS Summit and Expansion
- Russia to host BRICS Summit in October
- Discussion on new BRICS payment system and potential new member countries for 2025
- Focus on developing a settlement system for global South transactions in national currencies
Shift Away From a Shared Currency
- BRICS members move focus from a shared currency to localized payment systems
- Benefits: Saves exchange rate costs, strengthens local currencies and economies
China's Role in Payment Systems and Digital Currency
- China’s Cross-Border Interbank Payment System (CIPS) growth
- 62 new participants in the past year, totaling over 1,500
- China launched its first real trade service of Central Bank Digital Currency (CBDC)
- China’s 10-year lead on the US in digital currency development
- Potential for CBDC to revolutionize future BRICS trade
International Monetary Fund (IMF) Economic Outlook
- Revised higher growth outlook for China (5%) and India (7%)
- US forecasted for above 1% growth in G7; Euro area at 0.9%, Germany at 0.2%
- BRICS members predicted to have higher growth rates
Political and Economic Challenges for the US
- Inflation and increasing national debt in the US
- Political uncertainty affecting global perception of US democracy
- Example: Potential new 60% US tariff on Chinese goods if Trump wins presidency
Case Study: Electric Vehicle (EV) Industry
- Competition between US and China in the EV market
- Importance of nickel in EV batteries; US imports 100% of its nickel
- Alaska Energy Metals’ potential to supply nickel to US EV industry
- Key developments and comparisons in the mining sector
Conclusion
- BRICS developments suggest a seismic shift in global economic dynamics
- De-dollarization and digital currencies could reshape future international trade
- Monitoring gold and mining stocks as potential investment opportunities
- Importance of independent research before investing
Note: Information presented here reflects the current lecture and may change as the economic landscape evolves.