BRICS bid farewell to dollar

Plans on isolating Russia have once again fallen through. [The] SCO and BRICS summit held in Ufa has led to genuine success. Its results unambiguously demonstrate [that] the countries aspire for strengthening of multipolarity.

Central banks of BRICS countries have signed the agreement on forming a pool of foreign exchange reserves. This agreement will secure the members in case they experience problems with dollar liquidity. Suppose that one of the BRICS countries is not, for some reason, able to access her dollar stocks. At the first sight that does not seem to pose a problem. On the contrary, de-dollarisation would only serve to establish a new, more fair, world order. However, it's not as simple as it seems. Total refusal from the dollar would be a serious blow to any national economy. It especially goes for the countries strongly dependent on the import[s], as the major part of all international transactions is now effected effected in the American currency.

From now on there is no such a threat for BRICS - its members are going to help each other in case of liquidity shortage. The total pool of their foreign currency reserves amounts to 100 billion dollars. China, as the largest economy, enters into commitment in the amount of 41 billion. India, Russia and Brazil are each prepared to contribute 18 billion and South Africa - 5 billion dollars.

According to Andrei Kostin, the Chairman of the Management Board of VTB Bank [1], now BRICS members can effect up to 40-50% of payments to each other in national currencies. Thus our countries considerably decrease their dependency on dollar liquidity.

The President of Russia, Vladimir Putin :

“We have arrived at a decision to expand on using national currencies in our trade interactions. Moreover, we have established currency pools with some countries. Russian and Chinese central banks have exchanged corresponding capacity resources, entered into swap agreements and exchanged ruble-yuan futures.

“Reaching similar agreements with India, Brazil, and South Africa is of a great potential interest as well, as it would undoubtedly increase trade volume between our countries.”

Futures are contracts between two parties to buy or sell an asset (rubles or yuan in this case) with the payment coming at a future point. The delivery date and the future price are agreed upon at the moment of signing a contract - as a result the parties are secured against any future market changes. Accordingly, the risk of the ruble and yuan [denominated contract] to be negatively influenced is almost eliminated. Our countries are rapidly taking sustained measures in order to protect themselves from the consequences of the prolonged instabliity of the American economy.

Rosneft [2] and Essar [3] have concluded a contract to supply 100 million tons of oil within a 10-year period, which is a serious expansion of the market. Under this contract, Rosneft obtains a 49% share of Odinar [Vadinar? [4]] oil Refinery. The contract integrates a retail chain consisting of 1,600 oil stations. By 2017 their number will reach up to 5,000. Rosneft is on its way to control a part of th rapidly growing oil market of India [and] there is much more to it than just supplying oil.

Apart from that, Vladimir Putin put forward to his colleagues a proposal to form BRICS Energy Union. This Union will render highly effective protection against the USA and [its] Middle East partners' manipulations with prices of energy resources. Clear rules of the prospecive Energy Union will deactivate one more weapon of the USA mass influence. Slowly but surely the American hegemony seems to be sinking into oblivion.