The dollar will be killed – MK

During a visit to China on April 13, Brazilian leader Lula da Silva proposed abandoning the dollar in international payments. First, he rhetorically asked who decided that it was the dollar that became the main currency after the abolition of the gold standard, and then stated that the BRICS countries needed to develop their own currency for use in world trade.

The summit of the heads of state of the “powerful five” in August will be held in South Africa in a face-to-face format. Can the desire of the President of Brazil come true, what currency will replace the dollar in this case and what are the chances for the leadership of the ruble, Alexander Razuvaev, a member of the Supervisory Board of the Guild of Financial Analysts and Risk Managers, told MK.

Is it realistic for the BRICS countries to abandon the dollar?

— The BRICS currency has been talked about for a long time. Interest in this topic has intensified in the past year. In the summer, Russian President Vladimir Putin confirmed the plans of this supranational association to create its own currency for international trade instead of the dollar.

Then it was assumed that the new monetary unit would be launched on the basis of a basket of currencies of all BRICS member countries (Brazil, Russia, India, China, South Africa). At the end of last year, a lot was written about this project in the Western media with reference to economists and experts who considered different scenarios.

Westerners believe that the Mighty Five’s currency will be pegged to gold or raw materials, or both. Lula da Silva raised the issue of creating a BRICS currency during his visit to China, which is no coincidence. Obviously, we are talking about the possible exit of the yuan to this level.

– Does the BRICS have enough economic power to switch to settlements in their own currency, whatever it may be?

– Let’s get a look. BRICS today is half the world’s population, 25% of global GDP, half of the GDP of the G7 countries, if you count at face value, and more than the GDP of the “Big Seven” if you count it at purchasing power parity.

Comparing the economies of the G7 and the BRICS, experts rightly point out that about 80% of the GDP of the United States and other members of the “big seven” is the service sector – finance, insurance, education, medicine, personal services, while the share of real production is on average about 20% . Moreover, the US is still pursuing a deliberate policy of deindustrialization of its allies, which is clearly seen in the example of the EU.

BRICS has a different ratio. In the structure of the GDP of the countries of the “powerful five”, the share of services does not exceed 60%, and the real sector of production accounts for 35% to 55%, depending on the country. China, let me remind you, has been rightfully called the “world’s factory” for more than a decade.

In addition, BRICS can increase its power in a very short time, because Iran, Argentina, Egypt, Turkey, Saudi Arabia and Algeria have expressed their desire to join this supranational association. All this demonstrates that the BRICS have enough economic power to create their own currency.

– What will be the consequences for the BRICS if they abandon the dollar?

– The example of Russia has shown that under a record number of sanctions, one can live better than those who impose these sanctions – I’m talking about Europe, whose problems are just beginning. Everyone sees it.

In addition, imposing sanctions against half of the world is a dead end, which will become a painting in one’s own helplessness. So if BRICS shows unity, then there will be no tangible consequences for this supranational association.

— So what should the currency of the “powerful five” look like in the end?

– From my point of view, the BRICS currency, if it appears, will be very similar to the Soviet transferable ruble, but only for foreign trade. Or another scenario is possible, when the yuan will quickly replace the dollar in trade between the “powerful five” countries.

— Can the ruble become the BRICS currency?

– I believe that Russia with the ruble cannot compete with the Chinese yuan – our economy is too small in comparison. But we can and should talk about a single Eurasian currency, primarily for Belarus, Russia and Kazakhstan.

Someone says that it will be the ruble, someone says that it could be the Eurasian altyn. Lukashenka recently stated that he is for the Eurasian euro, but against the Eurasian ruble. I am also for the Eurasian euro. And I hope that Uzbekistan, Kyrgyzstan, Azerbaijan and Turkey and others will then be able to join this currency zone.

A sovereign economy is 300 million consumers. It would be nice if the world were divided into several currency zones – Eurasian, Latin American led by Brazil, etc.

At the same time, the yuan, of course, will be the main currency of the non-Western world. In principle, everything is ready for this. As for the BRICS currency, this is a political decision and, they say, it will be made in August. And then a big and fat “black swan” will fly to the US dollar and the euro. And if Erdogan also launches an Islamic finance center in Istanbul, this will already be a control shot in the head for the American currency.