[fork tapping on wine glass]...."Ahem"...
From naked capitalism, July 25:
We’re late to a story that interestingly has been very much under-reported, perhaps because it is contrary to the anti-globalist narrative….already a minority faction in the Anglosphere. We’ve said for some time that the prospects for replacing the dollar are a long way away, even more so with a newly-created, reserve currency aspirant.
Our views have been confirmed by none other that Russian central bank governor Elvira Nabiullina, who has effectively cleared her throat to sanity check the desire of some BRICS leaders, including Vladimir Putin, to announce a splashy breakthrough on the “new currency” front at a late August BRICS summit.
Keep in mind that wanna-be dollar refusniks have already been able to achieve a key aim, that of escaping dollar sanctions, by engaging in bi-lateral trade in each other’s currencies. This isn’t as tidy as it seems, since unless the two countries trading with each other also happens to have close to a trade balance, one will wind up holding the other’s currency and not have any use for it. Russia has been grumbling a bit about all the Indian rupee it now has.
The reason the dollar was not perceived to be problematic as a currency to retain is the dollar has very deep investment markets, including of course Treasuries, and robust and well-settled laws and institutions so investors aren’t worried about, say, using a dollar depositary or clearing firm. Dollars can also be swapped readily into other currencies. As a result, investment flows in dollars dwarf trade flows. The Bank of International Settlements once found they were over 60x trade flows.
Needless to say, the need for ready tradeadility, investible assets, and reliable institutions/legal regime work against China as a successor any time soon. For starters, China likes capital controls.
Now to Nabiullina’s remarks. From Bitcoin.com:
Bank of Russia Governor Elvira Nabiullina talked about the proposed BRICS currency on the sidelines of the central bank’s annual Financial Congress, which took place on July 6-7 in St. Petersburg…
The proposal gained much attention over the past week when Russian news outlet RT reported that Russia has confirmed the BRICS is launching a gold-backed currency. However, no BRICS officials have officially announced or corroborated the news.
The Russian central bank chief told reporters (translated by Google) that the idea of a BRICS currency “deserves attention.” However, she stressed that this project “will be quite difficult to implement,” emphasizing: “Like any idea of a supranational currency, it requires the consent of many parties. This is not a simple project at all.” Nabiullina continued:....
....MUCH MORE
