this post was submitted on 24 Oct 2024
58 points (96.8% liked)

World News

39011 readers
2875 users here now

A community for discussing events around the World

Rules:

Similarly, if you see posts along these lines, do not engage. Report them, block them, and live a happier life than they do. We see too many slapfights that boil down to "Mom! He's bugging me!" and "I'm not touching you!" Going forward, slapfights will result in removed comments and temp bans to cool off.

We ask that the users report any comment or post that violate the rules, to use critical thinking when reading, posting or commenting. Users that post off-topic spam, advocate violence, have multiple comments or posts removed, weaponize reports or violate the code of conduct will be banned.

All posts and comments will be reviewed on a case-by-case basis. This means that some content that violates the rules may be allowed, while other content that does not violate the rules may be removed. The moderators retain the right to remove any content and ban users.


Lemmy World Partners

News !news@lemmy.world

Politics !politics@lemmy.world

World Politics !globalpolitics@lemmy.world


Recommendations

For Firefox users, there is media bias / propaganda / fact check plugin.

https://addons.mozilla.org/en-US/firefox/addon/media-bias-fact-check/

founded 1 year ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
[–] partial_accumen@lemmy.world 20 points 3 weeks ago (14 children)

Here's where it falls apart, right here:

[Vladimir Putin] also said the increased use of BRICS national currencies for transactions will "minimize geopolitical risks."

Some of the BRICS countries have wildly volatile currencies either because of governments "printing money" to devalue their currency for economic stimulus for exports or to pay down debts. Alternatively straight up currency manipulation by the sovereign states issuing them. I would think this makes settling transactions in these local currencies a big risk for commerce. You don't know if the value of the currency you accept tomorrow will be worth what it is today. These are reasons GBP, Euro, and USD are so valuable as currencies, they generally have pretty consistent values.

[–] zante@slrpnk.net 3 points 3 weeks ago (1 children)

How will this be any worse on BRICS Clear than it currently is on Swift ?

[–] partial_accumen@lemmy.world 4 points 3 weeks ago* (last edited 3 weeks ago) (2 children)

How will this be any worse on BRICS Clear than it currently is on Swift ?

Lets say you're Egypt selling cotton to Russia. BRICS Clear is pushing local currencies. So Russia wants to pay for the Egyptian cotton in Russian Rubles. Lets say the amount of Rubles would buy 10,000 barrels of crude oil at the time of settlement. Russia is currently in economic dire straights and the currency value is dropping. When Egypt wants to spend its Rubles, if it can find a country willing to take them, it could only buy 5,000 barrels of crude oil.

How eager will Egypt be to settle another transaction in BRICS Clear when the value can evaporate. This is way international trade wants to settle in stable currencies.

[–] CanadaPlus@lemmy.sdf.org 1 points 3 weeks ago* (last edited 3 weeks ago)

All local currencies? Yeah, that would hamstring it a bit. I was kind of assuming it would be primarily RMB.

Edit: Skimming the declaration, they emphasised local currencies a lot. It's very light on details as to how, though, so basically I'll believe an n-currency international market when I see it.

[–] zante@slrpnk.net 1 points 3 weeks ago (1 children)

Right, but there ways to mitigate that, without relying on the dollar and although they are not insignificant, they’ve surely considered them - the political benefits are huge for them.

[–] partial_accumen@lemmy.world 3 points 3 weeks ago (2 children)

there ways to mitigate that, without relying on the dollar and although they are not insignificant,

Sure, you can rely on other stable currencies like Euros or GBP. Alternatively you can rely on gold, but if you have the ability to trade your own currency to someone willing to accept it and give you sufficient gold, and that you can produce that gold on demand to buyers, you don't really need a fiat currency except to facilitate transactions easier. The problem is these countries aren't backing their currency with gold (or other precious metals).

The tradeoff to gold backing is that you can't grow your economy either. The amount of currency in circulation will always be limited by the ratio of gold you're backing your currency with. This is why the USA abandoned the gold standard, and it was the right decisions. Before doing this, if you wanted to borrow money, you had to FIND someone with money that would be willing to lend it. There were instances of limits in growth simply because all the folks that held the vast majority of the wealth (and thereby gold backed currency) weren't lending it, so loans couldn't occur in volume.

[–] partial_accumen@lemmy.world 2 points 3 weeks ago* (last edited 3 weeks ago)

China would love for RMB to become a default reserve currency. There are strong accusations that China is a currency manipulator though. I'm not educated enough on the topic to have an opinion on it. However, countries choosing it as a reserve currency may be left holding the bag.

[–] zante@slrpnk.net 0 points 3 weeks ago

Awesome info thank you

load more comments (12 replies)