Anti-Dollar Alliance Prepares Launch Of BRICS Bank

Tyler Durden's picture

Three months ago we discussed in detail the growing anti-dollar hegemony alliances that were building across the BRICS countries (Brazil, Russia, India, China and South Africa). Their efforts at the time, to create a structure that would serve as an alternative to the IMF and the World Bank (which are dominated by the U.S. and the EU), appear to be nearing completion. As AP reports, Brazil's President Dilma Rousseff and Russia's Vladimir Putin have discussed the creation of a development bank to promote growth across the BRICS and hope to produce an agreement on the proposed institution at this week's BRICS Summit.

As AP reports,

Brazil's President Dilma Rousseff and Russia's Vladimir Putin have discussed the creation of a development bank to promote growth in Brazil, India, China, Russia and South Africa.


Rousseff received Putin in the presidential palace in Brasilia on Monday, a day before leaders of the five emerging BRICS nations meet in the northeastern city of Fortaleza.


Rousseff told reporters the bank would top the summit's agenda, adding she hoped the event would produce an agreement on the proposed institution.


She said the five countries "are among the largest in the world and cannot content themselves in the middle of the 21st century with any kind of dependency."


Brazil and Russia also signed bilateral accords on air defense, gas and education

The leaders who will be present (not so many big fans of the US there)...


They seem serious:


As we concluded previously, as RBTH reports, it seems the BRICS are not slowing down efforts to create their own IMF-alternative...

The BRICS countries (Brazil, Russia, India, China and South Africa) have made significant progress in setting up structures that would serve as an alternative to the International Monetary Fund and the World Bank, which are dominated by the U.S. and the EU. A currency reserve pool, as a replacement for the IMF, and a BRICS development bank, as a replacement for the World Bank, will begin operating as soon as in 2015, Russian Ambassador at Large Vadim Lukov has said.


Brazil has already drafted a charter for the BRICS Development Bank, while Russia is drawing up intergovernmental agreements on setting the bank up, he added.


In addition, the BRICS countries have already agreed on the amount of authorized capital for the new institutions: $100 billion each. "Talks are under way on the distribution of the initial capital of $50 billion between the partners and on the location for the headquarters of the bank. Each of the BRICS countries has expressed a considerable interest in having the headquarters on its territory," Lukov said.


It is expected that contributions to the currency reserve pool will be as follows: China, $41 billion; Brazil, India, and Russia, $18 billion each; and South Africa, $5 billion. The amount of the contributions reflects the size of the countries' economies.




The creation of the BRICS Development Bank has a political significance too, since it allows its member states to promote their interests abroad. "It is a political move that can highlight the strengthening positions of countries whose opinion is frequently ignored by their developed American and European colleagues. The stronger this union and its positions on the world arena are, the easier it will be for its members to protect their own interests," points out Natalya Samoilova, head of research at the investment company Golden Hills-Kapital AM.

Perhaps the following sums it all up perfectly...

Economists warn the IMF's legitimacy is at stake, and they say U.S. standing abroad is being eroded.

"Eroded" indeed...

*  *  *

Read more here on the BRICS morphing into an anti-dollar alliance...

If the current trend continues, soon the dollar will be abandoned by most of the significant global economies and it will be kicked out of the global trade finance. Washington's bullying will make even former American allies choose the anti-dollar alliance instead of the existing dollar-based monetary system. The point of no return for the dollar may be much closer than it is generally thought. In fact, the greenback may have already past its point of no return on its way to irrelevance.

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The Most Interesting Frog in the World's picture

When Bush was president I thought we didn't care what everybody else thought of US. Now we do?

CCanuck's picture

After he gets his panties untied..he's gonna...he's...He will draw a RED LINE! there..nananabooboo

Pladizow's picture

Tough talk from the BRICS, but why are contributions still valued in dollars?????

CCanuck's picture

Yaaaaaa Kruggie Rules... really I'd like to see him and his kind first in line at the guillotine parties.

Just stating a fact, the denomination printed in the article is for your consumption, do you believe they are going to use the dollar when operating?


Keyser's picture

The western banking cabals must be buying nail guns by the gross in preparation for all the suicides about to take place... 

COSMOS's picture

I am sure each is putting in its currency, the article translated it to dollars via exchange rates.  Its a basket of currency your loan will be in.  If you want to buy hairdriers, stereos, etc you use the chinese currency, soybean and a nice vacation use the real, nice military equipment and oil and gas use the ruble, but your loan being a basket you can convert your rubles say to all brazilian reals if you want only soybeans with your loan.  They are all convertible amongst each other and do not have to even mention the dollar in their offices.

BaghdadBob's picture

Yes & No. Each currency in the basket will be backed by gold.

Global Observer's picture

I don't think so. However, the currency to be issued by the bank may be backed by gold and the initial capital has probably been used to buy gold in the market. If they had already been buying gold at market rates, they would have approximately 2500 metric tonnes of gold to back the new currency to be used exclusively for settling trade balances. Their respective domestic currencies can be left purely fiat as they are now, without any fear for the others of losing the value of their savings, which would be denominated in the new currency.

Squid-puppets a-go-go's picture

if thats how its gunna work then its just a staging for one colossal arb opp

Tekrunner's picture

Yeah, that is most likely not how that's going to work, at least at first. It'll be either a bunch of FX swap agreements, or the bank funds will be in dollars or in a basket of currencies that are actually international (unlike, well, any BRIC currency for now).

Eventually they may agree to use some kind of new international reserve currency, but that doesn't really seem to be the immediate goal, and it wouldn't really make sense. Say Brazil gets in trouble and needs money from the not-IMF to deal with a liquidity crisis: how would it help them to get a bunch of rubles and rupees when they have to pay off their dollar-denominated debt (especially given how when one BRIC gets in trouble, other BRIC currencies tend to get hammered as well)?

This is certainly a step against the dollar hegemony, but we won't do away with the dollar so fast. Well, unless we do away with the entire financial system.

Grinder74's picture

And if you want bad BO covered by tons of curry, use rupees; and if you want bad foreign policy and curly hair, use rands.

/rim shot/

Liberal's picture

What will this mean for my EBT card? I'm still getting a free ride, right?

Escrava Isaura's picture

I wish we, as Zero Hedge readers, would have learned it by now.

Obviously, at least to me, as I read some of the comments, many of you have NOT.

DoChenRollingBearing's picture

The BRICS do not scare me at all.  Let them set up their bank.  Let's then see who abuses it the most, who is the most corrupt among that group of five loser countries.

Still waiting on someone who knows Russia well so I can do my article on the BRICS (and will fill me in to make it better) .  Still waiting...  Well, who can tell me something good about Russia and their financial system and their openness to capital investment?  Tick tock.

CCanuck's picture

Hey DCRB....

You might want to try using some coke & hookers as bait if you are looking for insider.

post turtle saver's picture

that only works on Western bankers... he's looking for information on *Russian* banking...

CCanuck's picture

How'bout vodka and a it Russians or Ukrainians that like to get drunk and pay women to kick them in face?

post turtle saver's picture

my understanding is Russian and Ukrainian is supposed to be one and the same these days, so I think you're covered

disabledvet's picture

Absolutely. "Enter more show horses." The EU is of no consequence to either the World Bank or IMF now anyways...other than being in constant need of, pardon me "bail ins."

All eyes on the Canadian dollar. If that thing gets clobbered ($1.40) the financing for all these mega resource plays will drop like a brick.

"All eyes on Space X" et al. One meteor brought back to
Earth could crash the price of copper to pennies a pound.

Be interesting to see just how secure the Putin regime really is as well. "That's an awful big piece of real estate for one guy to run" and "German/Russian cooperation" goes over in that part of the world lead ballon.

Rock On Roger's picture

Canadian labour is paid in canadian dollars.

Your dollar would buy $1.40 of Canadian services.

The financing for these mega resources plays is American dollars.

Why would the financing drop like a brick when it buys more than it once did?



Did you recieve a head injury?

Tall Tom's picture

Currently One US Dollar woll buy roughly $1.07 Canadian in Goods and Services.


There has not been that much disparity in the Canadian Dollar to the US Dollar in many, many years. The two currencies have been approaching Parity for quite awhile.


So...with that...


Did you receive a head injury?

Tall Tom's picture

At 6 AM EST on July 15, 2014 the Canadian Dollar is at $1.0731 USD.


It is really neat that all of the FX Data is right there at my disposal on the following website's frontpage...


So you can Downarrow me all that you want...BUT IT WILL NOT CHANGE THE FACTS.


LMAO at your fucking stupidity. (It is not ignorance but stupidity as the data is set right before your very eyes.)

mvsjcl's picture

Yeah. I don't get that either.

COSMOS's picture

Its the Canucks down arrowing you, see they dont like getting less than 1.40 for their canadian dollar, they know the currency markets are manipulated and that they are americas biatch.  They dont like it so they down arrow lol.

Tall Tom's picture

That just adds iciing to the cake. KITCO is headquartered in...CANADA



Tall Tom's picture

They are being jerks because I hit them with the facts (the Foreign Exchange is publically posted) and can back up what I write,


I am actually getting a good laugh.

Rock On Roger's picture

I know perfectly well how much the Canadian dollar is valued against the american paper.


I was using dis a bled vet's number since I was replying to him.


So perhaps you see why dis a bled vet is thinking wrong. If canadian $ goes to $1.40 would not the american $ buy more tar?

digitalindustry's picture

my answer is "head injury"


Plus the sweet IMF is only talking about the EU lately like they have a hard-on about them, particulary the "deflation" issue -  let me think ...

could that have anything to do with leaning on those idiots because in essence the "USD unlimited" credit line is out and they know the next result is :


"SRD's save the european union"


new debt for old, same debt, same owners.

lasvegaspersona's picture

Not sure how a development bank interacts with world trade.

Could be just a way to opt out of World Bank mischief.

hobopants's picture

I dunno, I think if they come out with a Gold backed currency it will be game over for the dollar. IMF has the SDR backed by nothing, why can't the BRICS produce something akin to that, but gold backed to inspire confidence?

Circle of DNA's picture

"Still waiting on someone who knows Russia well so I can do my article on the BRICS (and will fill me in to make it better) .  Still waiting...  Well, who can tell me something good about Russia and their financial system and their openness to capital investment?  Tick tock."


If you don't know it yourself then you're certainly not fit to right any kind of articles.


Why anyone should tell you anything? Your ignorance is your own business.

DoChenRollingBearing's picture

I intend to lessen my own relative ignorance of Russia's economy.  I have already started work to learn more.  I had hoped I could get some insight from professionals.

Nonetheless, I am doing the research necessary to write on why a BRICS bank (or the BRICS in general) need not inspire fear among us (or even Europe or Japan).


Speaking of ignorance (and in your own words), perhaps you mean "to write"?

"If you don't know it yourself then you're certainly not fit to right any kind of articles."


Also, following your own logic then, reporters, bloggers, Congressional researchers, misc. analysts, etc. who are not experts are not fit to research and write upon topics they choose to look into?

If no one chooses to pass along their experiences to me, then I will research where I can to get a good overview of how Russia fits into the picture.

fxrxexexdxoxmx's picture

DCRB...You do your thing and I will tell that MF'r messing with you to go suck Putins cock. He is an idiot. Those of us who have been reading your posts and contributions to ZH are aware of your abilities.

COSMOS's picture

Dochen, seriously dont write the article about Russia's economy.  Its obvious you dont have any knowledge or experience with it.  You sell Chinese bearings, you have been to China and dealt with them, you know Chinese ball bearings well so write about that.  Its like you haven't gone to medical school but you will start treating people and writing about medicine.  Do you think someone will let you operate on them if you havent been to medical school and gone through residency training?

Seriously dude write about what you have FIRST HAND experience with, otherwise its trash.

Ghordius's picture

"Nonetheless, I am doing the research necessary to write on why a BRICS bank (or the BRICS in general) need not inspire fear among us (or even Europe or Japan)."

DoChen, so you already decided that there is nothing to fear about and you want to research for facts that serve as evidence for your previously taken judgment?

highly debtful's picture

Ah, Ghordius, when the time comes please remind me never to start an argument with you. That is a battle I will not likely be able to win.  

Ghordius's picture

in my view, the very best arguments I had were those I lost. so I do hope we have an argument where I learn something new and get rid of a couple of my countless faulty reasonings and preconceptions

and this is my view of the "Fight Club ethos". it's not about winning. it starts with fighting, and for me it follows with hopefully losing, and improving by it

SunRise's picture

So if it's not about winning, why do you want to improve?

SunRise's picture

It is true that failure is on the path to success, but success is always the goal - if not this time then eventually.

highly debtful's picture

Agreed. Well said. Counterarguments often do bring new wisdom.

smacker's picture

"the very best arguments I had were those I lost"


{eyes rolling in "can't resist" mode}

You must enjoy the arguments you have with me ;-)

{/eyes rolling in "can't resist" mode}

Ghordius's picture

is that the quintessential British "get off your high horse" argument towards the quintessential Continental pompousness? guilty as charged, btw

meanwhile, to get back to the article's theme, the (Dollar Alliance's) US DoJ is busy in a big probe in London's megabank FX traders, and offering immunity deals to junior traders for information that leads to charges for FX manipulators

which leads me again to say: I'm thankful for the EUR. the 18 "ingredient" currencies could have been manipulated for a decade, without it...

unleash your "eyes rolling" to this ;-)

BobPaulson's picture

Somewhat off topic, but humour isn't funny if you have to label it. It's actually more funny when you know people with no sense of subtlety don't get it.

stoneworker's picture

The Russian government is virtually not in debt. They have had a budget surplus for a long time. Putin has a high approval rating without borrowing from future generations....I could go on, but perhaps you should try and write something you don't like....and don't see that they hate us for our freedoms....

DoChenRollingBearing's picture

At least some of what you write is true.  My research is not done.  

I have not written that anyone "hates us for our freedoms."  And that is not the topic I am addressing.