BRICS Pay - Another Effort to Bypass the US Dollar

A thank you to a reader for alerting me to this article on Silkroadbriefing.com that explains the new cloud based BRICSPay system. The article points out that this system being installed for use in the BRICS nations is another effort to bypass both the US dollar and also the US banking system. 

Below are a few excerpts from the article followed by a few added comments.

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"The BRICS grouping of countries, Brazil, Russia, India, China and South Africa are creating a single payment system, BRICS Pay, as part of the drive to establish a common system for retail payments and transactions between the member countries.

These nations, all among the worlds leading and most powerful emerging markets, plan to introduce a special cloud platform, which will connect their national payment systems. An online wallet will be developed with access to these payment systems, which will also include mobile apps similar to Apple Pay, which can be installed on smartphones for purchases in any of the five BRICS countries, regardless of which currency the payment and the money in the account of the buyer are denominated in.

This means that nationals of Brazil, Russia, India, China and South Africa will be able to use their own national currencies as a direct basis of exchange for external payments. This is being seen as a major step on the path to de-dollarization and a de-coupling from the current US controlled global banking system."

. . . .

"In order for settlements in national currencies to bypass the dollar, the People’s Bank of China will open lines for currency swaps to partner banks to support the exchange trade in yuan in regional currency markets. Similar lines will be opened by the central banks of Brazil, Russia, India and South Africa. In these instances, a settlement mechanism based on a basket of currencies of the BRICS countries and a separate financial infrastructure will appear. This, in turn, will support the diversification of the global financial system and currency multi-polarity. BRICS Pay, as a contactless transfer system, will give the citizens of the BRICS countries a convenient means of conducting transactions."

Please click here to read the full article on silkroadbriefing.com

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My added comments: The use of sanctions by the US government has created a predictable response around the world. Nations wary of get caught up in the problems associated with US sanctions are working an a variety of creative ideas to try and bypass the US centered banking system and the US Dollar.

The process so far has been very slow and gradual, but we do see that it continues to grow and there is no reason to think it will not continue to do so. We continue to monitor these kinds of efforts and report on them when information is available.


Added notes 8-23-19: Russia's Rosneft to switch from US dollars to Euros for oil contracts.

"Russia’s Rosneft (ROSN.MM), one of the world’s top oil producers and exporters, has notified customers that future tender contracts for oil products will be denominated in euros not dollars, five trading sources told Reuters."

Also, The Economist runs an article questioning what will come after Bretton Woods II which we covered here.

Jim Rickards Calls New Bull Market in Gold - Predicts "Gold Backed Digital Currency"

In recent articles Jim Rickards is now ready to call a new leg of a bull market for gold. He says the multi year bear market ended in December 2015 and has now been confirmed by two consecutive years of higher gold prices. Below are links to his two part article and an excerpt from each.

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The Next Great Bull Market in Gold has Begun - Part I

"This new trend will take gold past $1,400 per ounce by the end of 2018, past $4,000 per ounce by 2020 (if not sooner) and ultimately to $10,000 per ounce or higher by the mid-2020s.

This bull market actually began on Dec. 17, 2015, when the dollar price of gold sank to $1,051 per ounce. This new bull market was two years old last weekend."

. . . . .


The Next Great Bull Market in Gold has Begun - Part II

"The most important piece of evidence that the next great bull market in gold has begun is the technical behavior of the prior bear market itself.

Over many decades, commodities rallies have exhibited 50% retracements (bear markets) before resuming their long-term upward trends based on the slow, steady devaluation of the fiat currency in which the commodities are priced."

 . . . .
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It appears that Jim is also joining the ranks of those who believe that a gold backed blockchained based currency is coming from Russia and China. He talks about that prospect in this recent article. If this were to happen it could be a significant event in terms of how it may impact the US dollar. Here is a quote from this article:

"According to Russian government officials attending a recent monetary conference in Moscow, Russia, China and their BRICS allies are moving toward their own gold trading system (bypassing London and New York)."  . . . read more here

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Added comments: Readers here know we always keep an eye out for any event that might trigger the kind if crisis Jim Rickards has long predicted. In this new article Jim lists three potential triggers to watch for in 2018. Here is a quote:

"What are some of the emerging-market snowflakes I’m watching now? The three of most concern are China, Venezuela and Turkey." . . .  read more here

I would add another potential trigger to follow in 2018. That would be some kind of major crash in the US stock market related to events surrounding the Trump Administration. We are a full year into the Trump Presidency so he is now tied in the public mind to whatever happens with the economy and stock market. President Trump has cemented that tie by constantly pointing to the huge rise in the stock market as being due to his efforts. We can expect that if the stock market were to take a sharp dive for any reason (whether related to anything the President does or not), his political opponents will point the finger of blame his way. If the markets stay strong and the economy responds well to the tax cuts recently passed, I would expect President Trump to benefit politically. If the opposite were to happen, we might see the start of a process that ended his Presidency if the public blamed him for the market crash (if the Dems win Congress and start an impeachment process). So, it is something to keep an eye on and one reason why I am giving it until mid 2018 to see if this becomes a potential trigger for systemic instability. By then it should be clearer which way these various issues (and potential crisis triggers) are going.