August 21, 2023
The BRICS summit starts tomorrow.
So what does that mean?
First of all – it’s nothing special. They’ve done this every year for the last 15 years. But for some reason people on the internet are very interested in this particular meeting.
The summit starts tomorrow and runs through Thursday in South Africa. All the leaders of the BRICS member nations will be present except for Russian President Vladimir Putin who can’t travel because there is a war crimes warrant out for his arrest.
So for those of you who don’t know — BRICS stands for Brazil, Russia, India, China and South Africa. BRICS has evolved over the years into a cooperative, informal group of countries like an alternative to the G7 which is the group of western countries that the United States is a part of. If you want more back story on how all this started — I have a full deep dive video on this topic. I posted it back in April.
But back to this video.
Perhaps the biggest function of BRICS that people talk about is the BRICS currency. You should understand – it doesn’t exist. In the last few years – BRICS leaders have been talking about creating a currency among the member nations…but as of today – it’s not a thing. And even if they could possibly get one off the ground, it would only be valid in the BRICS countries and even that would probably take time to really take hold. Why do they want their own currency? Well, that’s mainly political. The majority of international trade is conducted in US dollars in fact the US dollar has been the backbone of the world economy and the official reserve currency since 1944. With that comes a lot of influence by the United States which these nations do not think is fair. They don’t like playing by the US rules.
I think where people get confused is – BRICS doesn’t have money – but it does have its own bank. Which is very real. In 2015 the BRICS nations launched the New Development Bank as an alternative to the World Bank and the International Monetary Fund which the United States is the largest shareholder of. BRICS nations also set up a mechanism (contingent reserve arrangement) to support members struggling with payments. Those banking and funding mechanisms are not only attractive to BRICS nations but they’re open to other developing and emerging economies that have had trouble dealing with the IMF and world bank in the past because those banks have policy condition attached to their loans.
Now – because BRICS nations are not part of the western world, not part of the European Union, or the G7 they talk a lot about expansion and adding new countries to their cooperative. According to South Africa, 40 countries including Saudi Arabia, Iran, the UAE, Argentina, Indonesia, Egypt and Ethiopia have all expressed interest in joining. Let me clear some misinformation up – France does *not* want to be a member of BRICS. The president of France did – however– ask to attend this summit to further diplomatic relations– which he is known for. Vladimir Putin shut that down.
As for this BRICS summit we are expecting the member nations will be talking about the potential for expansion to other nations, how to further lend money to other emerging economies and countries through their BRICS bank and how they can cooperate with each other economically – especially since both Russia and China are heavily sanctioned by the United States. We will have to see if there is any more talk about a possible currency.
