BRICS (Brazil, Russia, India, China, S. Africa) is the acronym signifying the next generation of economic power houses. Increasingly, these, and nations like them are working to diminish the U.S. Dollar as the World’s reserve currency. This week, China and Russia took more steps towards that goal.
China’s central bank has authorised the Bank of Communications, the country’s fifth largest lender, to undertake yuan clearing business in the South Korean capital, the People’s Bank of China (PBoC) said in a statement.
That action clears the way for China and South Korea to trade in Yuan (Remnibi) for transactions between their two countries thereby releasing them from use of the U.S. Dollar for international trade.
Russia has been working tirelessly with China and other BRIC nations towards the same goal – freedom from the Dollar and the IMF. As more nations set up clearing houses for other than dollar transactions, the Dollar will become less important in international trade.
China, Japan and Russia have already agreed to similar currency use between them. Chinese currency use for trade in Africa is also rapidly increasing.
Next week, Russian President Vladimir Putin will begin a tour of several Latin American countries, including Brazil. No doubt, decreasing dollar dependence will be on the agenda.
With more than 60% of the World’s currency reserves being held in U.S. Dollars, this increasing trend will have impacts.
The first, and most obvious impact will be massive inflation – in both the cost of goods and the cost of money. The dollar’s value will decline and make food, clothing, gasoline and just about everything else cost much, much more. Interest rates will skyrocket and make borrowing money just about unaffordable.
A portion of the rest of the world envisions a world without America. Some are making sure it happens.