BRICS countries may end USD trades
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I think he's on crack when he claims 1 BRICS unit being worth $55 USD is meaningful, like all of a sudden these countries will price their exports at some exorbitant rate. It will all be relative, and things that cost $1 US will be settled at $0.02 BRICS units or something.
The only good point he made was at the very end where he said the BRICS nations could get together and decide to only trade in BRICS currency, and they could ditch US treasury bonds simultaneously. That's the real threat here, not some imaginary revaluation of exports. I reckon any commodity-backed system will cause fiat-backed currencies to hyperinflate into oblivion and could force a worldwide adoption.
The only good point he made was at the very end where he said the BRICS nations could get together and decide to only trade in BRICS currency, and they could ditch US treasury bonds simultaneously. That's the real threat here, not some imaginary revaluation of exports. I reckon any commodity-backed system will cause fiat-backed currencies to hyperinflate into oblivion and could force a worldwide adoption.
I would expect massive spikes in gold and silver if and when this happens. Most BRICS countries have dumped SWIFT already and are using the alternative SPFS, so it would make sense to use a one currency alternative to the USD to make transaction settlements easier through the banks for trade.
Slowly but surely the global south leaders would skip meetings like G7 G20 and Ukraine peace in Swiss.
Not doing business in usd, first year is 240B... next year in BRICS the amount is just 1T. So no more extra usd that these countries can lend out, ie buying US treasuries.
Not doing business in usd, first year is 240B... next year in BRICS the amount is just 1T. So no more extra usd that these countries can lend out, ie buying US treasuries.
YouTube and X are full of people spewing hyperbolic nonsense about BRICS hoping for viral engagement. The BRICS (especially Russia and to a lesser extent, China) are wanting to build the infrastructure to compete with the USD/SWIFT system. Every time some foreign minister makes a comment about it doesn't mean it's happening tomorrow. These wheels have been slowly turning for a few years now and they will continue their glacial pace. Just keep stacking and hope WWIII doesn't break out before it's all said and done.
Moscow exchange suspends trading in dollars and euroThe new round of US sanctions sparks push back — Moscow Exchange suspended trading in dollars and euros on Wednesday. Apart from the MOEX, which operates Russia’s largest public trading markets, the sanctions package targeted its two subsidiaries, namely the National Clearing Center and the National Settlement Depository.
MOEX said in a statement. that “transactions in the US dollar and euro will continue on the over-the-counter market.” To establish exchange rates, the Bank of Russia will be using “bank records and information from digital over-the-counter trading platforms,” the regulator added.
ICYMI: Saudi Arabia’s petrodollar agreement with the US has expiredSignaling a major shift in the global financial landscape, MBS announced that Saudi Arabia will not renew the 75-year-old agreement that helped preserve the US dollar’s dominance in international trade.The move will allow Riyadh to sell oil in multiple currencies including the yuan, euros, yen, etc, instead of exclusively in dollars.It could signal an end to Washington’s global financial dominance and raises the question of what the US is famous for exporting that the world is buying.
The euro’s share of global foreign exchange holdings fell last year amid concerns that plans to use frozen Russian assets to finance Ukraine could further erode the appeal of Europe’s single currency.Other countries cut euro assets in their central bank reserves by about €100bn last year, a drop of nearly 5 per cent, the European Central Bank said in a report published on Wednesday. The Euro is has fallen to a 3 year low of 20% and down from 25%. With it's share of trade falling 0.7%The ECB warns that “weaponising” currencies only makes them less attractive, endangers the ability of the EU to issue debt cheaply. With EU members holding €13.8 trillion ($14.7 trillion). Half a % (50bps) is nearly €70B more EU countries would spend on interest payments in a year.
The Music Just Stopped: Japan Banking Giant Norinchukin To Liquidate $63 Billion In Treasuries & European Bonds To Plug Massive Unrealized Losses | ZeroHedge
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Now, if Nochu, as it is affectionately known by bankruptcy lawyers, was a US bank circa one year ago, it would not have to sell anything: it could just pledge all of its sharply depreciated bonds at the Fed's BTFP facility, and get a par value for them.
Unfortunately, Nochu is not US but Japanese, and it is not 2023 but rather 2024, when the high-rate disaster of 2023 was supposed to be over. Supposed to be... but instead it's only getting worse. Regular readers will hardly need it, but for novices Nikkei gives the following quick primer: "Interest rates in the U.S. and Europe have risen and bond prices are down. This reduced the value of high-priced (low-yielding) foreign bonds that Norinchukin purchased in the past, causing its paper losses to swell."
So faced with no other options, Nochu is doing the only thing it can: an orderly liquidation of tens of billions of securities now, when they are still liquid and carry a high price, in hopes of avoiding a disorderly liquidation and much worse, in a few months when the bond market freezes up.
And yes, the Japanese rates canary is quite, quite massive: as of the end of March, Norinchukin had approximately 23 trillion yen of foreign bonds (about $150 billion), amounting to 42% of its total 56 trillion yen of assets under management.