On July 30, the new BRICS bank went online and is prepared with $100 billion in seed money to protect the five emerging market countries within the coalition from future problems stemming from fluctuations created by the dollar.
The BRICS bank was created one year ago by five of the most prominent economies that have emerged since the 2008 credit crisis and the financial decline of both Europe and the United States. In fact, the creation and accelerated growth of several institutions that both mirror and compete with Western led financial systems came in part out of the dollar’s global expansion because of Quantitative Easing, and use of the dollar by the U.S. as a weapon in geo-political policy.
And with several warnings of a coming financial crisis looming within the next two to three months, the opening of the BRICS bank for business is just in time to be able to support countries like China, Russia, and Brazil, who are all experiencing monetary or equity downturns over the past three weeks.
The agreement on the BRICS $100 billion currency reserve pool came into force Thursday. The fund was set up by the developing nations group to protect their national currencies from volatility in global markets.
“The arrangement is important not only because it provides the possibility to quickly obtain additional liquidity, but its very existence has a positive, stabilizing effect on the market. Similar agreements created by other countries (for example, the European Stability Mechanism) continue to be in force and fulfill their functions,” Russia’s BRICS group representative told TASS.
China will make the biggest contribution of $41 billion to the fund. Russia, Brazil and India will donate $18 billion each, while South Africa’s investment will be $5 billion. – Russia Today
Providing currency protection may not be the only purpose of the new BRICS bank, as analyst Dr. Jim Willie has intimated that the bank will be the center focus for a new gold trade system that is expected to be the financial point of contact for the Eurasian Economic Union, the Shaghai Cooperation Organization, and the new Silk Road.
It is perhaps ironic that decisions made in Washington to try to weaken economies in Russia and China have backfired to the point where they, and three other economies, felt the need to disassociate themselves from dollar hegemony and build competing infrastructures to protect themselves from the use of the reserve currency as a geo-political weapon. And with the original mission of the BRICS bank tied specifically to protecting certain nations from attacks and fluctuations that are soon to come from the dollar’s instability, the BRICS coalition realized that they could take this single scope to much greater levels, and set it on a course to end the dollar’s grip on the entire global financial system.