Reuters -- Russia Says BRICS Nations Favor Common Payment System

Russia and other BRICS nations have long been talking about various ways to bypass the US dollar based global payments system. While nothing major has happened there yet, here is yet another article appearing in Reuters quoting Russian officials on this topic. Below is a brief excerpt.

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"Brazil, Russia, India, China and South Africa, a group of major emerging economies known as BRICS, back the idea of developing a common payment system, a Russian official said on Thursday.

Russia and its BRICS peers have been looking for ways to decrease their dependence on the U.S. dollar and have advocated using their national currencies in mutual trade."

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This article in the South China Morning Post says China is encouraging Chinese corporations to "diversify away for US dollar debt". In this case Euro based debt is promoted by the Chinese government.

Added comment: The article also says the BRICS nations has "discussed" the idea of using a "common cryptocurrency for mutual payments". However, it also goes on to point out that in the past Russian officials have spoken out against cryptocurrencies. So far, this all seems to be an area where a lot of study and discussion takes place, but no actual payments system based on any kind of cryptocurrency has emerged out of it.

Additional added note: The ongoing major repo operation at the US Fed continues to generate a lot of speculation. As the "temporary" program seems to expand further out into the future, more and more skeptics are raising questions as to what is going on here. 

Some suggest the Fed is trying to cover up some kind of problem inside the banking system. Meanwhile, the Fed continues to insist nothing unusual is going on with Chairman Powell directly stating that in this recent written testimony to Congress as follows:

"In response to the funding pressures in money markets that emerged in mid-September, we decided to maintain a level of reserves at or above the level that prevailed in early September. To achieve this level of reserves, we announced in mid-October that we would purchase Treasury bills at least into the second quarter of next year and would continue temporary open market operations at least through January. These actions are purely technical measures to support the effective implementation of monetary policy as we continue to learn about the appropriate level of reserves. They do not represent a change in the stance of monetary policy."

This article appearing in non mainstream Wall Street on Parade is an example of the kind of skeptical analysis of these unsual Fed actions. It points out that two congressmen from Texas raised questions to Chairman Powell about all this. It quotes Chairman Powell responding to these questions at one point in this way (I added underline for emphasis):

"Powell: “We’re doing a lot of forensic work to understand why. Some of that may be reserves – the level of reserves needs to be higher than we thought, which means our balance sheet a little bigger. There may also be aspects of our supervisory and regulatory practice that we can look at that would allow the liquidity that we have, that we think is the appropriate level, to flow more freely in the system. Without, though, undermining safety and soundness.”

This recent article in Zero Hedge points out that the "little bigger balance sheet" has already jumped up to over $4 Trillion once again and represents a very rapid reversal of all the hard fought efforts to reduce their balance sheet with its QT (Quantitative Tightening) program. So it is not surprising we see articles like the one in Zero hedge questioning all this. 

We have stated here that readers should follow this closely over time to see if "there is nothing to see here" or if something troubling is going on inside the banking system that the Fed prefers not to make public. It is worth pointing out that the last major financial crisis in 2008 supposedly "caught everyone by surprise" and that the Fed obviously would not want to create public panic by announcing some kind of major problem even if they are working on some kind of problem behind the scenes. As always, time will give us the answer.