Putin plans new currency for BRICS countries in latest bid to end US dollar dominance

Not many people outside of Russia have heard of Kazan.

But if the architects (or midwives) of the new payments system planned for the BRICS countries have their way, it may one day be as well known (at least to economists) as Bretton Woods, the birthplace of our current payment system. international payments created. in July 1944.

The heads of the BRICS (Brazil, Russia, India, China and South Africa) agreed to closer financial cooperation at a conference hosted in the city by Vladimir Putin last month.

In the future, this could even involve a new common currency and a new international payments system.

The star of the show was Putin, whose name appears on an arrest warrant issued by the International Court of Justice over his country’s invasion of Ukraine.

But the driving force and ambition behind this move – which clearly targets the United States and its Western allies – is China.

The goal is to end the dominance of the US dollar in international trade and investment. That has united the group and made it attractive to countries such as Iran, Egypt, Ethiopia and the United Arab Emirates, which are already part of the broader BRICS+ group of emerging economies.

Saudi Arabia and several smaller African and Asian countries are apparently knocking on the door. It represents about 50% of the world’s population and definitely deserves to be taken seriously.

The new payment system is likely to be an ambitious blockchain-based cryptocurrency.

The alignment of the countries involved also has an interesting political reason, rather than merely an economic one.

Like the leaders of China and Russia after the fall of communism, they embrace a kind of state-led capitalism and a top-down system of government, in contrast to our Anglo-Saxon capitalism with its liberal democracy and rule of law.

They argue that the latter is not suitable for their populations at the current stage of development, but the real reason could be that they would prefer their own political future not to be determined by free elections.

So, assuming it is not hampered by too many domestic restrictions, the monetary and payments system could even succeed on the international stage.

Especially since America is about to be led by a man who puts America first and international issues second.

They may feel like their chances are pretty good. However, there is a view in Western banking circles that the idea of ​​the new currency will have difficulty taking off.

Maybe. But it is worth keeping a close eye on Donald Trump – and the rest of the Western world.

• Bob Bischof is vice president of the German-British Chamber of Industry and Commerce