Given the following realities; the BRICS and those that wish to trade with them must go on a gold standard in part or in whole. Why?
It’s all about supply chains and payment chains. The US must rebuild supply chains to remain self-sufficient in certain commodities or it must trade with the BRICS on the BRICS terms. And that means with Gold in hand
The BRICS, in turn, must build payment chains (and value-added portions of supply chains) to replace the SWIFT system. Either that or they must then remain dependent on the US. And that means with the USD in hand
The alternative to ignoring these choices between economic self-sufficiency and a Gold standard for continued international trade is: isolation, misallocation and misuse of resources, and finally escalation of war.
What follows is a description of the situation, a contextual overview of the BRICS plan, and how the G7 must continue to respond over the next 5 years.
1- The Currency:
The BRICS are in the process of creating a settlement medium (currency, medium of exchange) for international trade comprised of Gold and other assets deemed separable from Dollar influence.
Delivery and receipt of this Settlement Medium concurrent with the reciprocal goods ( the goods bought with the Settlement medium) exchanged for said Medium will make final all transactions negotiated.
2- The Unit and Technology:
The currency will make use of Blockchain. In doing so this will serve as an immutable contract between negotiating parties. In combination with other precautionary measures,1 it will give reasonable assurances against fraudulent representations as to what the currency has actually backing it.
The combination of UNIT type prorata measurements, Blockchain type security, and Current Accounting economics it is believed will serve to solidify the nascent currency’s denomination, reliabililty, and value.
4- The G7 Problem, Solved With Gold & Silver:
It is believed the West’s G7 Central Banks will need to have BRICS currency exposure in their reserve to better hedge their own economic risks. Failing literally to have that BRICS currency, the G7 CBs and sovereign wealth funds will simply continue to accumulate the assets (Gold, Silver etc) deemed important (or hard to get on demand like Gold and Silver) within the Store of Value basket the BRICS created. in other words, they will simply reverse engineer the basket and buy the parts needed.
The G7 CBs can then trade by creating their own mirror basket of Eastern Currencies, bonds, and Gold in what will likely be an IMF/SDR type of basket for risk purposes if ever needed.
6- The BRICS Challenge to Dollar Hegemony
For over a decade, discussions have simmered about moving away from the U.S. dollar. Recently, these ideas have taken a more concrete shape, driven by the BRICS nations, which are positioning themselves as a counterbalance to Western influence.
7- The Three Phase Plan
BRICS is advancing a three-step plan to establish a new international currency. This includes:
- adopting a gold standard, 7
- creating a unified payment system with advanced technologies,
- and promoting central bank digital currencies (CBDCs).
This initiative aims to reshape the global economy, challenging the dominance of the U.S. dollar established since the Bretton Woods Conference.
The BRICS nations have been increasing their gold reserves, now totaling 6.3 thousand tons. As the world’s largest gold buyers since 2022, their actions signal a clear intention to develop a new global currency
8- The End of Dollar Dependency
To achieve financial independence from Western systems, BRICS is developing its own payment systems and strengthening digital currencies. Russia’s Ministry of Finance is working on a platform to facilitate money transfers between BRICS countries, aiming to reduce the impact of Western sanctions.
Russia is also progressing with its digital ruble, launched in a pilot project in August 2023. This digital currency is now accepted in 11 Russian cities, with plans for further expansion.