As I’ve been warning my readers, the most significant development in international finance since 1971 will be unveiled just over one month from today.
A new BRICS gold-linked currency will be announced on Aug. 22 at the BRICS Leader’s Summit conference in Durban, South Africa (the BRICS are Brazil, Russia, India, China and South Africa).
The fact is the global desire to move away from the dollar as a medium of exchange for international trade in goods and services has gone from a discussion point to a novelty to a looming reality in a remarkably short period of time.
The new BRICS currency has the potential to displace the U.S. dollar as the leading payment currency and reserve currency from a standing start in just a few years. It won’t happen overnight, but it could happen much faster than many realize.
Time’s up for King Dollar
The bigger-picture reality is that after 79 years under the Bretton Woods arrangements, 52 years since Nixon closed the gold window and 49 years since the petrodollar agreement with Saudi Arabia, the reign of King Dollar as the world’s leading payment currency is rapidly coming to an end.
This should come as no surprise since global monetary arrangements usually change every 40 years or so.
Nonetheless, the world is unprepared for this geopolitical shock wave. Western elites appear to have been asleep at the switch for the past several years as the BRICS rose in prominence. They’re still asleep.
The BRICS nations are a substantial and credible alternative to Western hegemony. Acting together, they represent one pole of a new multipolar or even bipolar world.
This play for global reserve currency status by the BRICS will affect world trade, direct foreign investment and investor portfolios in dramatic and unforeseen ways.
The process by which this will happen is unprecedented although it bears some resemblance to the elevation of the dollar under Bretton Woods in 1944 and the creation of Special Drawing Rights (SDRs) in 1969.