On Friday, July 7, 2023, news broke in the financial market media that the "BRICS" will implement their plan to create a new international currency for trading and financial transactions, and that this new currency will be "Gold-backed".
How might the BRCIS manage to swim away from the US dollar? While no details are available yet about how the new BRICS currency might be structured, it should not stop us from speculating about what lies ahead. The BRICS could establish a new bank, funded by gold deposits from BRICS central banks.
The physically deposited gold holdings would be shown on the asset side of the BRICS bank's balance sheet - and could be denominated, for example, "BRICS-Gold", where 1 BRICS-Gold represents 1 gram of physical gold.
The exporters from the BRICS countries and the other member countries would have to be willing to sell their goods against BRICS-Gold instead of US dollars and other Western fiat currencies, and the importers from the Western countries would have to be willing and able to pay their bills in BRICS gold.
Such an increase in the gold price would devalue the purchasing power of the official currencies - not only the US dollar but also the BRICS currencies - against the yellow metal.
The BRICS countries would build up gold reserves to the extent that they run, or will run, trade surpluses.
These few considerations already show how disrupting the topic of "Creating a new gold-backed international trading currency" could be: The BRICS could well trigger landslide-like changes in the global economic and financial structure.
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