IMAGE: Kazan Family Center, Kazan, Tatarstan, Russia. Photo: Andrey Korchagin

Blake Lovewell
21st Century Wire

This is the second part of my BRICS Coin series examining the many facets of the emerging BRICS financial system. In it, we will look at some of the new proposed institutions that have been announced, and what we can expect going forward.

BRICS+, a group of non-Western nations, are developing a new parallel set of financial institutions. In response to increasing Western sanctions and the weaponisation of hegemonic financial institutions – the emerging multi-ploar consensus has decided that enough is enough, and that they will build their own monetary system, outside of the US dollar dominion.

Enter Kazan

Russia is hosting the BRICS annual summit this week. It takes place in Kazan, an increasingly important central Asian hub. The name Kazan comes from the name of a large cooking pot or cauldron used extensively in Central Asia, from Afghanistan to the Balkans. It’s a symbol of cultural importance: a huge Kazan (or Qazan) is often the focal point of weddings where families come together to share from the communal pot. This seems to be an apt metaphor for the emerging currency and trading system that is being discussed at this year’s gathering. All members are invited to create a ‘central pot’, whereby they can partake in the communal success and ongoing development of the BRICS bloc. One thing is for sure, America and its staunch allies are not invited to this wedding party.

De-Dollarisation

As I outlined in my prior article, BRICS coin – The Unit vs. The Dollar, there has been an excessive regime of sanctions levied against Russia and its allies by the USA, the Five Eyesalliance, and their quislings in Europe. The massive ramping-up of the policy of sanctions, as well as the CIA coup d’etat in 2014 in Ukraine, has forced Russia out of the US-dominated global financial system. However, the policy has proven to be a failure on the part of America, as it has pushed the BRICS bloc even closer together. BRICS founders; Brazil, Russia, India, China and South Africa, as well as a large contingent of aspirational members, can now see the benefit of flouting of the so-called “rules based international order” which the US and its allies are constantly referring to when justifying the collective punishment of countries that will not bend to their will.

Thus, the BRICS network of nations have begun the work in creating a payments system that will sit outside of Western control. For the last century, the US has dominated global finance, with the US dollar being the successor to the Britain’s Pound Sterling as the world’s reserve currency. However, it now looks like BRICS is calling time on American dominance, and the gunboat diplomacy that backs it up. We can remind readers that when asked, Paul Krugman, the former economic advisor to President Reagan, once let slip that, “Fiat money is backed by guns”. Conversely, the BRICS policy is not to regime change into the next fiat currency, but to make the American fiat currency system obsolete by fostering its own institutions. I see this as a strong policy, whilst cautioning that diplomacy takes much longer than violence to achieve its end. In the words of Russian Foreign Minister Sergei Lavrov:

“This protracted phase of decline is confronted by an unequivocal historical movement towards a multipolar world order, where the fundamental principles of the UN Charter – sovereign equality of states and non-interference in internal affairs – will be implemented in practice, ensuring a fair process that balances interests rather than imposing external will. This is a lengthy and arduous process, but the momentum of history favours our cause. No force can impede these objective trends.”

Russia’s Role

Russia is chair of the BRICS group for 2024. The BRICS+ (including Egypt, Ethiopia, UAE and Iran) is not a strict political institution, more often likened to network of governments, or even as a high-level ‘talking shop’ for the Global South. In the last few years it has gained in its political caché and geopolitical importance. With the proposed accession of states like Nigeria and Saudi Arabia, BRICS+ will encompass the majority of the global oil supply. With accession of NATO member Turkiye, it will gain more in terms of importance for international relations. But the engine house of the BRICS movement is Asiatic in character, with the center of gravity oscillating between Russia, India and China. Whilst no country rules the bloc – unlike ASEAN which China clearly dominates – there is primacy among equals. I see Russia and China as dominant motivators among the group. Russia due to the sanctions regime and the hangover from the Cold War, and China as a bona fide global superpower who has been snubbed by the USA and is now pursuing a route of diplomatic diversity away from its previous West-centric outlook. India is a reluctant yet energetic member of BRICS, still fostering ties with the West, but playing on both fields at once. Brazil and South Africa are important emerging economies, but don’t yet have the clout of the leading BRICS states.

That said…

Russia, as chair of BRICS+, made clear that one of its key priorities will be economic integration of its members. Almost all of its priorities as chair emphasise the term ‘co-operation’. This is reflected in the nomenclature of the bloc when discussing institutions and agreements, that each is voluntary. To my eye this draws a distinction between BRICS integration and European Union integration. The EU seeks to tie its members in contractually and developed a European acquis or system of law, further glued together through a political union.

Witnessing the EU project struggle to keep balance with dissent and populism rising from within, I believe the BRICS method is better suited towards their end of ensuring long-term stability of their new multipolar order.

Institution building

Ahead of the meeting in Kazan, the Russian Central Bank and Ministry of Finance held an important meeting. Here they issued a strikingly important document which tells us a lot about the mood and tempo of political change in BRICS+ and gives us insight into what might emerge from this year’s confab in Kazan.

I will start with this excerpt which hints at Russia shouldering the responsibility for re-shaping the global economy:

“We recognize the crucial role of BRICS in the process of improving the international monetary and financial system, with a view to making it more responsive to the needs of all countries and contribute towards sustainable growth of the global economy.”

This appears to be a neat summation of the narrative which runs throughout BRICS policy proposals. It includes encouragement of egalitarianism amongst states – in stark contrast to the Western-dominated system – but without having to openly call it out. BRICS policy treads a line between obeying norms, and blazing a new trail. They are cautious not to delve too quickly into a solution which is too radical it will be shot down, and tends to veer more towards tenets of continuity and stability. Still, they are all in agreement that the status quo is not serving BRICS+ members and necessitates global change.

BRICS Cross-Border Payments Initiative

We then learn through this document about the parallel international payments structure that is coalescing amongst BRICS+. In my view there is a parallel institution for most of the existing institutions – which are controlled largely by Western powers. Firstly of note, we have BRICS Cross-Border Payments Initiative (BCBPI) – a multi-currency system for international settlement. This is a clear competitor to the US and European SWIFT messaging system for international payments. The SWIFT system, as it stands, does not allow Russia to partake in any transactions, furthermore any transactions which can be linked to Russia may also be censored creating an unworkable minefield for any countries wanting to do business or interact with Russia. They make this clear in defining the BCBPI:

“We recognize the widespread benefits of faster, low cost, more efficient, transparent, safe and inclusive cross-border payment instruments that are built around the principle of minimizing trade barriers and non-discriminatory access.”

‘BRICS Clear’

The next proposal by the BRICS is a financial clearing house, independent of the West. ‘Clearing’ is the process by which complex trades in stocks and bonds are unfurled, and settled. A clearing house is the middleman in the interaction, formalising and guaranteeing the terms of settlement. They also decide which banks may interact. This creates difficulty when a clearing house is located in the West and cannot, due to sanctions, allow interaction with Russian banks for example. Globally speaking, the most pivotal is the London Clearing House. BRICS+ propose BRICS clear as an alternative:

“We agree to further discussion on the feasibility of establishment of an independent cross-border settlement and depositary infrastructure, BRICS Clear”

BRICS Rating Agency

Another vital institution to be built is that of ratings agencies. Currently financial products, banks and even countries are rated by a small group of agencies based in the USA. These credit ratings agencies decide if a government or institution is credit worthy, or their bond is of good value, or whether or not a stock portfolio is worthwhile, by issuing ratings like AA, or AAA. Some of these agencies came into disrepute in the 2008 Financial Crash, as they rated bundles of mortgages as ‘safe’ and worthwhile investments, when really they were reckless speculative gambles with no solid backing. Then, when the mortgage derivatives market crashed, further corruption was revealed. Yet, these ratings agencies are allowed to carry on their criminal activity which ultimately props-up a transnational criminal cabal of cartels and vulture capitalists.

Once again, Russia and China have found it hard to receive accurate ratings from Western agencies and have levied the claim that they have been subjected to unfair downgrading. No surprise then that they wish to pivot to a BRICS Credit Rating institution.

BRICS (Re)Insurance Company

Another key institution which is often relegated to the niche economists is all-important issue insurance. Not the kind of domestic car insurance providers – here we are talking about insurers who back nation states, and who cover huge trade deals and sections of the financial markets. It is vital for high-finance to have these bodies to back their deals otherwise the risk of the deal failing would make the risk environment unfriendly for trade. The BRICS already has its New Development Bank and its Contingent Reserve Arrangements – a competitor to the International Monetary Fund (IMF) to help bail out projects and economies in turmoil, though what they are proposing here is a much deeper and more integrated institution:

“Further deepening of integration processes within BRICS requires the formation of a sovereign financial system of the member countries. We agree that an important component of such a system could be an independent reinsurance capacity. We agree to facilitate discussion to explore feasibility of possible solutions in this area, including BRICS (Re)Insurance Company”

IMAGE: BRICS Pay payment system. Demonstrated with a 500 Ruble voucher to be spent at the BRICS conference in Kazan.

BRICS+: New Names, Same Games

I have outlined a few limbs on this fledgling sapling of an alternative financial structure, but before we go too far down the narrative that BRICS is cleaving a continent off from the mainland, and setting sail into the sunset, I wish to issue an important caveat. I believe that there are, embedded in their fine print, many ties to a global financial superstructure. Whilst it may appear that there is a great divorce in progress, I hold the view that there are powerful forces behind global finance which seek continuity and their plans are echoed throughout BRICS publications. These are also worthy of note and description. On one level, this actually makes sense, as it would seem that one of the longterm goals of BRICS would be to try and harmonise its economic activity with the rest of the world, with a view to eventually interface with the rest of the global financial system in order to maximise opportunities, and to conduct trade and finance with agreement capable and otherwise friendly nations.

ISO 20022 & SDGs

Here I will raise the concept of ISO 20022. This is the programming language which is being used throughout CBDC architecture the world over. Whether it’s Nigeria’s e-Naira, Sweden’s e-kroner or the future e-Dollar, they all will be using ISO 20022. I did a deep dive on ISO 20022 in my 7 Pillars of a Global CBDC System article, describing how it is a vital plank of the effort to create a global system of surveilled digital currency. As it is so prevalent it should be no surprise to find that we find reference to it in the BRICS proposal document, falling under the remit of the so-called ‘BRICS Payments Task Force (BPTF)’. On this subject we await the announced research paper, “Approaches to drafting uniform rules for the ISO 20022 messages in cross-border payments among the BRICS countries supported by alternative financial messaging channels”.

And to those readers who have made it this far, I appreciate your longevity. This subject is difficult to grasp at points and the verbiage of high-finance is often hard to penetrate. To simplify the last point: BRICS+, whilst seeming to pull away from a global financial system, is really partaking in a higher level global financial system that isn’t all that different from the current global order, only that the new consensus and its terms and conditions will not be dictated by Western nations.

Further to this point I will add the presence of UN Sustainable Development Goals. Throughout BRICS policy explorations, we have littered these commitments to the UNSDG agenda:

“We encourage progressing the 2030 Agenda for Sustainable Development and commit to achieve stronger, greener, more sustainable and more balanced global development “.

Now for the regular citizen, it might be nice to see that their globalised financial institutions, which have huge data centres, and who fund wars around the world – give a performative nod to the birds, bees and trees. However, throughout my research I have found that the SDGs have very little to do with helping nature, far more for taking nature from its rightful custodians and farming it off to financial speculators. Perhaps this look in to the UN is merely to find some common language in international relations in order to help develop consensus. Now here is not the time to discuss further this topic, readers might explore the work of Whitney Webb and Iain Davis at Unlimited Hangout for a deep dive into the globalist corruption. Realistically speaking, just like the US often does, the BRICS alliance can just as easily opt out of UN-led frameworks as and when it suits them, including voluntary programs like the global Agenda 2030 and the Paris Climate Accords.

Conclusion

And so, to Kazan…

We are at a critical juncture for the global economy. Global debt is tipping into the tens of trillions. There is no obvious route for nation states to pay their debts, nor even to tend to them. I believe we are approaching a free-fall moment, a crash of the global financial system which is buttressed by the US dollar world reserve currency. Given the sums of debt and the globalised nature of the problem, it will be a much, much bigger wildfire than the 2008 crisis. It will be a global crisis of confidence. Yet those big bankers have had over 15 years to re-arrange their plans and to foment their plots behind closed doors, and they are more ready than the regular people on Earth.

Many central banks, especially BRICS members like China and Russia, have been buying gold at a record pace. They are hoarding assets of real value in the face of the massive speculative bubbles of fake assets: paper gold, lent out to the tune of thousands of ounces for every one ounce of real gold, a bond market with no nation state able to back their bonds, not even the UK or US, among many other bubbles. Thus I look with trepidation at the best laid plans of Bankers and Billionaires.

On gold we must await the announcements of BRICS+ as to whether they will include gold in a new unit of account – The Unit (see my first BRICS Coin article for more). But we can expect the announcement of a tranche of alternative economic institutions. It will likely be these institutions which rise pyrrhic from the ashes of the next financial crash and begin rebuilding the world economy, in Russian, in Hindi, Mandarin, Portugese, Persian and Arabic. Yet, for now it seems we must all wait with baited breath, and cling to our financial life rafts as the debt tsunami approaches.