The Future of the BRICS Alliance and US Dollar

Jul 21, 2024

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.