Putin plots new forex for BRICS international locations in newest bid to finish US Dollar domination

Not many outside Russia have heard of Kazan.

But if the architects – or midwives – of the planned new payments system for the BRICS countries have their way, one day it may be as well-known – to economists at least – as Bretton Woods, the birthplace of our present international payments system created in July 1944.

The heads of BRICS – Brazil, Russia, India, China and South Africa – agreed closer financial cooperation at a conference hosted in the city by Vladimir Putin last month.

In future, this may even involve a new joint currency and international payment system.

Power games: Russian President Vladimir Putin hosts a conference for the BRICS group countries in the Russian city of Kazan last month

Star of the show was Putin, whose name is on an arrest warrant issued by the International Court of Justice because of his country’s invasion of Ukraine. 

But the driving force and ambition behind this move – which is clearly aimed at the US and its Western Allies – is China.

The aim is to end the US Dollar domination of international trade and investment. That has brought the group together and has made it attractive for countries such as Iran, Egypt, Ethiopia and UAE, which are already part of the broader BRICS+ group of emerging economies.

Saudi Arabia and a number of smaller African and Asian countries apparently are knocking on the door. At close to 50pc of the world population, it definitely deserves to be taken seriously.

The new payment system is likely to be an ambitious blockchain-based crypto currency.

The line-up of the involved countries also has an interesting political raison d’être rather than merely an economic one.

Like China and Russia’s leaders following the demise of communism, they embrace a kind of state-led capitalism and top-down system of governance – in contrast to our Anglo-Saxon capitalism with its liberal democracy and rule of law. 

They argue that the latter is unsuitable for their populations at the present development stage, but the real reason could be that they would rather not have their own political futures determined by free elections.

So, assuming it is not being hindered by too many internal constraints, the currency and payment system might even succeed on the international stage.

Particularly since the US is about to be led by a man who is putting America first and international issues second.

They may feel that their chances are pretty good. However, there is a view in Western banking circles that the new currency idea will struggle to get off the ground.

Maybe. But it is worth Donald Trump – and the rest of the Western world – keeping a close eye.

• Bob Bischof is Vice President of the German British Chamber of Industry & Commerce