On August 22nd-24th, #brics countries leaders will meet in South Africa for a summit that will discuss topics such as trade or infrastructure development. But the big elephant in the room, that participants have decided to leave out of the agenda, is the brics currency. There is speculation that the summit will discuss, unofficially, an alternative to the dollar with a currency backed by gold, that will be used for trade settlements. The (west) world was not taking it very seriously until #saudiarabia decided to apply to be a member of #brics, because the implications for the petrodollar are huge, should the currency ends up existing. If all crude oil trade, currently settling in USD since Kissinger striked the deal with former Saudi king in the 70’s, stops being negotiated and quoted in USD, the impact on the US economy could be fatal. Although it’s difficult to visualize that change in the short term, simply because there are no debt instruments to invest the proceeds of trade in the new currency, the fact that they’re working on an alternative at a time where the US is going through a delicate economic transition from #zirp to equilibrium at 5-6% rates, should be a cause of concern to US officials. The luxury of having a reserve currency, might be under attack.
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